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"A company bought a piece of equipment for $302,000. The company is using the 7 year...

"A company bought a piece of equipment for $302,000. The company is using the 7 year MACRS property class to depreciate the asset for tax purposes. At the end of year 5, the company sold the equipment for $178,000. The tax rate is 29%. What is the tax that the company pays from the sale of the equipment?"

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Answer #1

Pl find the attachment for getting the same. As per the analysis the Book value is 80,875.60 when the equipment is sold. I have used Half year convention and depreciation is halved in 5th year.

Capital gain = $178,000 - $80,875.600 = $97,124.400.

Payable tax for the company = 97*29%,124.40 = $28166.08

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