Income tax rate = 30% Capital gains tax rate = 15%

A.Your company is considering investing in a new asset. The old asset, which has a book value of $100,000, can be sold for $85,000. The purchase price of the old asset was $450,000.

B. What are the tax effects of the sale of the old asset?

Using the chart below, calculate the tax effects of this sale.

Book Value 200,000

Proceeds on Sale 377,000

Initial Purchase Price 350,000

Capital gains tax rate
Income tax rate
PROBLEM A
Old Asset
Book Value
Proceeds on Sale
Initial Purchase Price
Outputs
Cash Distribution Table	Distribution	Tax Effects
Book Value
Capital Gain
Capital Loss
Recaptured Depreciation
Proceeds on Sale
PROBLEM B
Old Asset
Book Value
Proceeds on Sale
Initial Purchase Price
Outputs
Cash Distribution Table	Distribution	Tax Effects
Book Value
Capital Gain
Capital Loss
Recaptured Depreciation
Proceeds on Sale