At the beginning of its 2021 tax year, Hiram owned the following business assets: Furniture Equipment Machinery Date Placed in Service Initial Cost Accumulated Depreciation 6/19/19 5/2/18 9/30/18 $50,750 78,250 70,000 $19,681 55,714 49,840 Recovery Period Depreciation Convention 7-year Half-year 5-year 5-year Half-year Half-year On July 8, Hiram sold its equipment. On August 18, it purchased and placed in service new tools costing $614,000; these tools are three-year recovery property. These were Hiram's only capital transactions for the year. Required: Compute Hiram's maximum cost recovery deduction for 2021. In making your computation, assume that taxable income before depreciation exceeds $1,250,000. Use Table 7-2. (Enter all amounts as positive values. Round your intermediate computations and final answers to the nearest whole dollar amount.) Furniture Equipment Machinery Total MACRS Depreciation Section 179/bonus on new tools Maximum 2021 cost recovery deduction 2021 Depreciation

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Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.