Question

Three years ago, you purchased some 5-year MACRS equipment at a cost of $135,000. The MACRS rates are 20 percent, 32 percent, 19.2 percent, 11.52 percent, 11.52 percent, and 5.76 percent for Years 1 to 6, respectively. You sold the equipment today for $82,500. Which of these statements is correct if your tax rate is 23 percent and you ignore bonus depreciation?
a. The tax refund from the sale is $13,219.20.
b. The book value today is $40,478.
c. The taxable amount on the sale is $47,380.
d. The tax due on the sale is $14,830.80.
e. The book value today is $37,320.

Answer 1

Answer:

d. The tax due on the sale is $14,830.80

Explanation:

Calculation to Determine Which of these statements is correct if your tax rate is 34 percent

First step is to calculate the Book value

Book value = $135,000 × (1 −.20 −.32 −.192)

Book value= $38,880

Second step is to calculate the Taxable amount

Taxable amount = $82,500 - 38,880

Taxable amount = $43,620

Now let calculate the tax due on the sale

Tax = $43,620 × .34

Tax= $14,830.80

Therefore The statements that is correct if your tax rate is 34 percent will be :

The tax due on the sale is $14,830.80