MACRS RATE$$

Recovery year

$3$ years

$5$ years

$7$ years

$10$ years

$1$

$33\%$

$20\%$

$14\%$

$10\%$

$2$

$45$

$32$

$25$

$18$

$3$

$15$

$19$

$18$

$14$

$4$

$7$

$12$

$12$

$12$

$5$

$12$

$9$

$9$

$6$

$5$

$9$

$8$

$7$

$9$

$7$

$8$

$4$

$6$

$9$

$6$

$10$

$6$

$11$

$4$

$$

A corporation is selling an existing asset for$$ $$1,000.$ The$$ asset, when$$ purchased, cost$$ $$10,000,$ was being depreciated under MACRS using a fiveminusyear 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$\_\_\_\_\_\_\_\_.$

Part $2$

A$.$

$$$$1,100$ tax liability

B$.$

$$$$3,600$ tax liability

C$.$

$$$$280$ tax benefit

D$.$

$$$$0$ tax liability