Equipment that was purchased for $800,000 has a current book value of $400,000.
ID: 1177334 • Letter: E
Question
Equipment that was purchased for $800,000 has a current book value of $400,000.Assume a capital gains tax rate of 28%.
Compute the net tax payment or savings if you sell the equipment for $703,933.Answer $%u201385,101, a savings on taxes $85,101, an increase in taxes $303,933, an increase in taxes $%u201326,899, a savings on taxes $%u201385,101, a savings on taxes $85,101, an increase in taxes $303,933, an increase in taxes $%u201326,899, a savings on taxes $%u201385,101, a savings on taxes $85,101, an increase in taxes $303,933, an increase in taxes $%u201326,899, a savings on taxes
Explanation / Answer
Equipment that was purchased for $800,000 has a current book value of $400,000.
Assume a capital gains tax rate of 28%.
Compute the net tax payment or savings if you sell the equipment for $703,933.
Cap gains = Sale price-Book value
= 703,933-400,000
=303,933
Cap Gains Tax = 28%*303933 = $85,101
85,101, an increase in taxes
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