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    An asset was purchased three years ago for $140,000. Compute the tax loss on the sale and the related tax benefit if the asset is sold now for $15,320.

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    An asset was purchased three years ago for $140,000. It falls into the five-year category for MACRS depreciation. The firm is in a 35 percent tax bracket. Compute the:

    a. Tax loss on the sale and the related tax benefit if the asset is sold now for $15,320.

    b. Gain and related tax on the sale if the asset is sold now for $58,820.

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    https://brainmass.com/business/accounting/59654

    Solution Preview

    The MACRS 5-year recovery period class has the following depreciation rates.
    Year Depr. Rate(%)
    1 20%
    2 32
    3 19.2
    4 11.52
    5 11.52
    6 5.76
    Then at the end of three ...

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