how do you solve for a tax burden or credit when given the basis of $200,000...
how do you solve for a tax burden or credit when given the basis of $200,000 and a current book value of $120,000 and the selling price of $165,000 and the tax is 40%?
Homework Answers
Asset Purchased for = $200,000
Current Book Value of Asset after 8 years = $120,000
Firm is selling Asset for = $165,000
Profit on Sale on Asset = Current Book Value - Selling value
= $165,000 - $120,000
= $45,000
Total tax burden on sale = Profit on Sale on Asset*Tax rate
= $45,000*40%
= $18,000
So, Total Tax Burden caused by Sale is $18,000
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