A partner invests into a partnership a building with an original cost of $180,000 and accumulated depreciation of $80,000. This
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Answer:
a) Fund pre-tax Amount $ 179,084.77
b) Funds after-tax $ 163,267.82
c) Dividends after-tax amount : $ 159,813.27
Explanation:
We calcuale the future value of the fund at 6% annual rate over a 10-years period:
Principal 100,000.00
time 10.00
rate 0.06000
Amount 179,084.77
after taxes, as this were held for a longer period will be considered long term gain and taxes at 20%:
179,084.77 - 100,000 = 79,084.77 capital long-term gain subject to taxation
79,084.77 * (1-0.20) = 63,267.82
Now we add the 100,000: 163,267.82
Alternative scenario:
6% less 20% dividends tax after-tax return on dividends:
0.06 x (1 - 0.2) = 0.048
We calcualte the future value using this rate:
Principal 100,000.00
time 10.00
rate 0.04800
Amount 159,813.27