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Purchased equipment that has a depreciable

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St. John's Paper has purchased equipment that has a depreciable cost of $1 million. The equipment will be depreciated using a 5-year MACRS schedule. If the company sells the equipment at the end of two years for $600,000, then how much in TAXES will be owed as a result of the sale? Assume a TAX RATE = .40

  • There are no tax consequences.
  • The company would have to pay $33,000 in taxes.
  • The company would have to pay $48,000 in taxes.
  • The company would receive a tax credit of $124,000, i.e., taxes are -$124,000.
  • The company would have to pay $54,000 in taxes.

Reference no: EM132169159

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