An in-place machine with $ B = \$165,000 $ was depreciated by using the Modified Accelerated Cost Recovery System (MACRS) over a 3-year period. The machine was sold for \$60,000 at the end of year 2 when the company decided to import the item that required the use of the machine. In year 2, gross income (GI) = \$1 million and operating expenses (OE) = \$500,000. Determine the tax liability in year 2 if $ T_e = 35\% $.The tax liability in year 2 is determined to be \$ _______.

In MACRS there is more depreciation during initial years of equipment purchase and depreciation goes…

Answered: riod. The machine was sold for $60,000…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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riod. The machine was sold for $60,000 at the end f year 2 when the company decided to import the item th e machine. In year 2, gross income (GI) = $1 million and operating expenses (OE) = $500,000. Determine the ta = 35%.