What is the tax consequence for each of possible sales price

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Problem 1: Three years ago you bought a machine for $1,000. You expected to use it for 10 years, and you have been depreciating it over a 10-year life using the straight-line method and an expected salvage value of $0. It is now Time 3, and you are going to sell the machine. What is the tax consequence for each of the possible sales prices below? The ordinary income tax rate is 25%, and the capital gains tax rate is 20%.

  1. What is the tax consequence if you sell it for $800?
  2. What is the tax consequence if you sell it for $500?
  3. What is the tax consequence if you sell it for $700?
  4. What is the tax consequence if you sell it for $1,300?

Reference no: EM132958210

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