You own some equipment that you purchased 4 years ago at a cost of $216000. Th

You own some equipment that you purchased 4 years ago at a cost of $216000. The equipment is 5-year property for MACRS.
You are considering selling the equipment today for $75500. Which one of the following statements is correct if your tax rate is 35 percent?

MACRS 5-year property

Year

Rate

1

20.00%

2

32.00%

3

19.20%

4

11.52%

5

11.52%

6

576%

Answer
The tax due on the sale is $26425. The aftertax salvage value is $62138.68. The book value today is $178675.20. The taxable amount on the sale is $37324.80. The accumulated depreciation to date is $37324.80.