Question
(Capital gains tax) The J. Harris Corporation is considering selling one of its old assembly machines. The machine, purchased for $30,000 5 years ago, had
(Capital gains tax) The J. Harris Corporation is considering selling one of its old assembly machines. The machine, purchased for $30,000 5 years ago, had an expected life of 10 years and an expected salvage value of zero. Assume Harris uses simplified straight-line depreciation (depreciation of $3,000 per year) and could sell this old machine for $35,000. Also assume Harris has a 21 percent marginal tax rate. a. What would be the taxes associated with this sale? If the old machine were sold for $35,000, there would be $ ______ (Tax Payments or Tax Savings) b. If the old machine were sold for $25,000, what would be the taxes associated with this sale? c. If the old machine were sold for $15,000, what would be the taxes associated with this sale? d. If the old machine were sold for $12,000, what would be the taxes associated with this sale?
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