Determine any capital gain, or capital loss generated by each event described below. Use them to determine the amount of income tax effect, if the effective tax rate is 35%

(a) A MACRS-depreciated asset with a 7-year recovery period has been sold prematurely after 4 years at an amount equal to 40% of its first cost, which was $150,000.

(b) Land purchased 4 years ago for $1.8 million was sold at a 10% profit.