What would be the tax effect on the sale

Reference no: EM13296192

Your company has an existing 5 year old piece of equipment it wishes to sell. The purchase price was $37,000. The company paid $500 to have it shipped, $2,000 to have it installed plus an additional $6,000 in working capital to initially operate the machine. Tour company doesn't believe the machine fits the current operational agenda of the company. You think the machine can now be sold for $7,500. The machine is being depreciated straight line to $4,000 salvage over 6 years. Your company is in the 40% tax bracket. Assuming you could sell the machine today, what would be the tax effect on the sale?

a. $3,400 tax loss form of capital gain

b. $1,000 tax payment from depreciation recapture

c. $600 tax payment from depreciation recapture

d. $1,000 tax gain from capital loss

Reference no: EM13296192

Questions Cloud

How large will your retirement account be in 31 years : You are to make monthly deposits of $800 into a retirement account that pays 9.8 percent interest compounded monthly. Required: If your first deposit will be made one month from now, how large will your retirement account be in 31 years?

Find the average induced emf in the wire during this time : A four-turn circular wire coil of radius 0.495 m lies in a plane perpendicular to a uniform magnetic field of magnitude 0.415 T. what is the average induced emf in the wire during this time

What is the tom current stock price after the recap : Tom Co value of operations is worth $1.2B after a recapitalization. Tom raised $300M in debt to buy back stock.

A substances are most likely to undergo dissolution in water : Five different substances are given to you to be dissolved in water. Which substances are most likely to undergo dissolution in water

What would be the tax effect on the sale : Your company is in the 40% tax bracket. Assuming you could sell the machine today, what would be the tax effect on the sale?

Find the value of the constant k : Find the value of the constant k, [2] (ii) solve the equation f(x) = 0.

Where is the center of mass of the glass : A tall, slender drinking glass with a thin base is initially empty. Where is the center of mass of the glass

What is the pure expectations theory : What is the pure expectations theory? What does the pure expectation theory imply about the term structure of interest rate?

Define a grignard synthesis : Give two reasons why anhydrous conditions must be maintained during a Grignard synthesis. Write chemical reactions to explain

User Account

All Pages