A warehouse was purchased for $9MM ($2MM down +$7MM loan) 5 years ago and is recently sold for $10.1MM gross sales price. Assume the following: • 27% of the purchase price was attributable to land value • the current mortgage balance is $6.1MM • 25% tax rate on accumulated depreciation • 15% tax rate on capital gain. • 5% selling cost. What is the tax due on depreciation recapture at sale?

A warehouse was purchased for $9MM ($2MM down +$7MM loan) 5 years ago and is recently sold for $10.1MM gross sales price. Assume the following: • 27% of the purchase price was attributable to land value • the current mortgage balance is $6.1MM • 25% tax rate on accumulated depreciation • 15% tax rate on capital gain. • 5% selling cost. What is the tax due on depreciation recapture at sale?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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