Question

Equipment that was purchased for $900,000 has a current book value of $450,000. Assume a capital gains tax rate of 28%. Compute the net tax payment or savings if you sell the equipment for $636,400.

Answer 1

Answer:

there is an increase in taxes of $52,192

Explanation:

The computation of the net payment or saving is shown below:

Given that

Book value = $450,000

Sale value = $636,400

since the sales value is more than the book value so here the capital profit is there

Therefore capital profit would be

= $636,400 - $450,000

= $186,400

Now tax would be

= $186,400 × 28%

= $52,192

So there is an increase in taxes of $52,192