Question

• The land and warehouse and office furniture are sold on June 17, 2020. The purchase price was allocated as follows: $1,600,000 to the land, $7,800,000 to the warehouse. The company originally purchased the property at a cost of 8,000,500. During there ownership they took $678.000 of depreciation expenses. What is the tax liability? Where appropriate assume L/T capital gains is subject to 20%)

Answer 1

Computation of longterm capital gain tax
Date	Particulars	Amount ($)	Amount ($)
June 17, 2020	Proceeds from Land	1600000
	Proceeds from warehouse	7800000
	Total Sales Proceeds		9400000
June 17, 2020	Original Cost of the property at the time of purchase	8000500
	Less: Depreciation	678000
	Book value as of date		7322500
	Longterm capital gain		2077500
	Longterm capital gain tax @ 20%		415500

Note: - Depreciation is taken as per the amount provided. Since the date of purchase is not provided in the question.