Question 26 (1 point) A firm is selling an existing asset for $5,000. The asset, when purchased, cost $10,000, was being depreciated under MACRS using a five-year recovery period from the table below 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 MACRS RATE Recovery 3 years 5 years 7 years 10 years year 33 20 14 10% 24532 25 18 3 15 1918 12 12 10 1) $0 tax liability 2) $1,320 tax liability 3) $1,160 tax liability 4) $2,000 tax benefit