Tax calculations For each of the following cases, describe the various taxable components of the funds received through sale of the asset, and determine the total taxes resulting from the transaction. Assume 40% ordinary and capital gains tax rates. The asset was purchased 2 years ago for $200,000 and is being depreciated under MACRS using a 5-year recovery period. (See Table 3.2 on page 100 for the applicable depreciation percentages.)

a. The asset is sold for $220,000.

b. The asset is sold for $150,000.

c. The asset is sold for $96,000.

d. The asset is sold for $80,000.

TABLE 3.2 Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes 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 9 9

6_ 5 9 8

7 __ _9 7

8 _ _4 6

9 _ _ _6

10 _ _ _6

11 ___ ___ ___ 4

Totals 100% 100% 100% 100%