Calculate the tax payable on the proposed sale

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Question - Walt Hubble is contemplating selling rental property that originally cost $200,000. He believes that it has appreciated in value at an annual rate of 6% over its 4 year holding period. He will have to pay a commission equal to 5% of the sale price to sell the property. Currently, the property has a book value of $137,000. The mortgage balance outstanding at the time of sale currently is $155,000. Walt will have to pay a .1 5% tax on any capital gains and a 25% tax on recaptured depreciation.

a. Calculate the tax payable on the proposed sale.

b. Calculate the after-tax net proceeds associated with the proposed sale, CFR.

Reference no: EM133060308

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