MACRS RATE Recovery year 3 years 5 years 7 years 10 years 1 33% 20% 14% 10% 2 45 32 25 18 3 15 19 18 14 4 7 12 12 12 12 9 9 6 5 9 8 7 9 8 6 9 6 10 6 o w N. 2 4 . O A. $0 tax liability OB. $7,560 tax liability OC. $4,400 tax liability OD. $7,720 tax liability U A corporation is selling an existing asset for $21,000. The asset, when purchased, cost $10,000, was being depreciated under MACRS using a five-year recovery period, and has been depreciated for four full years. If the assumed tax rate is 40 percent on ordinary income and capital gains, the tax effect of this transaction is O A. $0 tax liability OB. $7,560 tax liability OC $4,400 tax liability OD. $7.720 tax liability