Determining tax effect of transaction

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Reference no: EM13130867

If the assumed tax rate is 40% on ordinary income and capital gains, the tax effect of this transaction is: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.

A. $0 tax liability

B. $1,160 tax liability

C. $ 1,320 tax liability

D. $2.000 tax liability

Reference no: EM13130867

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