Show all work: You own equipment that you bought four years ago at a cost of...
Show all work: You own equipment that you bought four years ago at a cost of $150,000. The equipment is depreciated using MACRS and has a book value of $30,000. You decide to sell the equipment today for $42,000. What is your tax liability if your marginal rate is 35%?
Homework Answers
| Tax Liability | = | Profit on sale of equipment | * | Tax rate |
| = | $ 12,000 | * | 35% | |
| = | $ 4,200 | |||
| Working: | ||||
| Selling price of equipment | $ 42,000 | |||
| Less book value of equipment | $ 30,000 | |||
| Profit on sale of equipment | $ 12,000 | |||
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