A duplex was purchases for $120,000 and depreciation of $3,300 has been taken for the last seven years.The net proceeds from the sale of the property is $135,000.
(a)Assuming the property qualifies for capital gains treatment at a 15% rate,what is the tax owed?
(b)What are the net funds from the sale?

Question

Quizplus · Accepted Answer

The Answer is a)

\begin{array}{c}\begin{array}{lll} \text {Purchase price}\ \text {7 years of deprecation $ (7 \times \$ 3,300) $}\ \text {Book value}\\ \text {Net proceeds}\ \text {Book value}\ \text {Capital gain}\ \text {Capital gains tax rate}\ \text {Capital gains tax}\end{array}\begin{array}{r}\$ 120,000 \\underline{23,100 }\ \$ 96,900 \\\$ 135,000 \\underline{96,900 }\ 38,100 \15 \% \\$ 5,715\end{array}\end{array}

b)

\begin{array}{c}\begin{array}{lll}\text {Net proceeds}\\text {-Capital gains tax}\\text {Net funds from the sale}\end{array}\begin{array}{r}\$ 135,000 \\underline{ \$5, 715} \ \$ 129,285\end{array}\end{array}

A Duplex Was Purchases for $120,000 and Depreciation of $3,300