A firm is selling an existing asset for $5000. The asset when purchased cost $10,000, was depreciated under MACRS using a five-year recovery period and has been depreciated for four full years. If the assumed tax rate is 40% on ordinary income and capital gains, the tax effect of this transaction is:
A. $0 tax liability
B. $1,160 tax liability
C. $ 1,320 tax liability
D. $2.000 tax liability© BrainMass Inc. brainmass.com October 10, 2019, 1:19 am ad1c9bdddf
From the table of MACRS for 5-year property, the depreciation rates for first four years are ...
The solution gives step-by-step calculation with brief explanation.