Tax calculations For each of the following cases, determine the total taxes resulting from the transaction. Assume a

40%

tax rate. The asset was purchased

2

years ago for

$196,000

and is being depreciated under MACRS using a 5-year recovery period

LOADING...

.a. The asset is sold for

$215,600.

b. The asset is sold for

$147,000.

c. The asset is sold for

$94,080.

d. The asset is sold for

$75,300.

Question content area bottom

Part 1

Calculate the firm's tax liability for each case:(Round to the nearest dollar.)

	Sale	Capital		Tax on		Depreciation		Tax on		Total
	Price	Gain		Capital Gain		Recovery		Recovery		Tax
$	215,600	$		$		$		$		$

Part 2

(Round to the nearest dollar.)

	Sale	Capital		Tax on		Depreciation		Tax on		Total
	Price	Gain		Capital Gain		Recovery		Recovery		Tax
$	147,000	$		$		$		$		$

Part 3

(Round to the nearest dollar.)

	Sale	Capital		Tax on		Depreciation		Tax on		Total
	Price	Gain		Capital Gain		Recovery		Recovery		Tax
$	94,080	$		$		$		$		$

Part 4

(Round to the nearest dollar.)

	Sale	Capital		Tax on		Depreciation		Tax on		Total
	Price	Gain		Capital Gain		Recovery		Recovery		Tax
$	75,300	$		$		$		$		$

(Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.)

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%
*These percentages have been rounded to the nearest whole percent to simplify calculations while retaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual unrounded percentages or directly apply double-declining balance (200%) depreciation using the half-year convention.