Q1 : Research Clinic purchased a blood-testing machine 4 years ago for $96,000. It is being depreciated under MACRS with a 7-year recovery period using the percentages given in Table 4.2 on page 166. Assume a 30% tax rate. a. What is the book value of the blood-testing machine? b. Calculate the clinics tax liability if it sold the blood-testing machine for each of the following amounts: $120,000; $26,000; $231,200; and $21,000.

9 a TABLE 4.2 for First Four Property Classes Rounded Depreciation Percentages by Recovery Year Using MACRS Percentage by recovery year 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 6 5 9 8 7 7 8 4 6 9 6 10 6 11 Totals 100% 100% 100% 100% "These percentages have been rounded to the nearest whole percent to simplify calculations while retain- ing realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual unrounded percentages or directly apply double-declining balance depreciation using the half-year convention. 9