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P2–6 Capital gains taxes Perkins Manufacturing is considering the sale of two nondepreciable assets, X and Y
P2–6 Capital gains taxes Perkins Manufacturing is considering the sale of two nondepreciable assets, X and Y. Asset X was purchased for $2,000 and will be sold today for $2,250. Asset Y was purchased for $30,000 and will be sold today for $35,000. The firm is subject to a 40% tax rate on capital gains.
a. Calculate the amount of capital gain, if any, realized on each of the assets.
b. Calculate the tax on the sale of each asset.
Expert Solution
Answer:
a. Amount of capital gain, realized on each of the assets
|
Asset = X |
Capital gain |
|
|
Sale proceeds |
$ 2250 |
|
|
Purchase price |
$ 2000 |
$250 |
|
Asset =Y |
||
|
Sale proceeds |
$35000 |
|
|
Purchase price |
$ 30000 |
$ 5000 |
|
Total Capital gain |
$ 5250 |
b) the tax on the sale of each asset
|
Asset = X |
Tax on asset |
|
|
Sale proceeds |
$ 2250 |
|
|
Purchase price |
$ 2000 |
|
|
Capital gain |
$ 250 |
|
|
Tax @ 40% |
$250 *40/100 |
100 |
|
Asset =Y |
||
|
Sale proceeds |
$35000 |
|
|
Purchase price |
$ 30000 |
|
|
Capital gain |
$ 5000 |
|
|
Tax @ 40% |
$5000 *40/100 |
$ 2000 |
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