Question $12(2$ points$)$

If the market value of an asset exceeds its book value at the time of sale, does this result in a tax expense or a tax credit?

Tax expense, because the sale results in a capital gain that is subject to taxes. Tax credit, because the sale demonstrates efficient asset management and is rewarded.

Tax expense, as it indicates depreciation recapture that must be reimbursed.

Tax credit, because the asset has appreciated beyond its initial cost basis.