A nanotube forming asset was purchased 3 years ago for $240,000. It was just sold for $285,000. The asset was depreciated by the MACRS method with n = 5 years and has a current book value of $69,120. Determine the amount of (a) CG and DR, and (b) prepare a spreadsheet showing the taxes each year for Te = 28%. Assume the asset’s GI = $100,500 and OE = $50,000 for each of the 3 years.
What will be an ideal response?
(a) CG = 285,000 – 240,000
= $45,000
DR = 240,000(0.2 + 0.32 + 0.192)
= $170,880
(b) Taxes are shown in column I. TI for year 3 must include CG and DR as fully taxable.
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