[The following information applies to the two next questions. Suppose that you buy an office building for $1.2M. Approximately 40% of the value of the property is land. You sell the property at the end of 3 years for $1.5M and take your full depreciation allowance every year you hold the property. Right before you sell the property, you invest $600,000 to replace the roof and repave the parking lot. Your depreciation recovery tax rate is 25% and your capital gains tax rate is 5%. What is your depreciation recovery tax? O $9,230.77 $13,846.15 O $19,636.36 O $25,384.62 O $32,727.27 Question 2 What is your capital gains tax? O $0. O $12,230.77 O $15,000.00 O $39,000.00 O $45,000.00
[The following information applies to the two next questions. Suppose that you buy an office building for $1.2M. Approximately 40% of the value of the property is land. You sell the property at the end of 3 years for $1.5M and take your full depreciation allowance every year you hold the property. Right before you sell the property, you invest $600,000 to replace the roof and repave the parking lot. Your depreciation recovery tax rate is 25% and your capital gains tax rate is 5%. What is your depreciation recovery tax? O $9,230.77 $13,846.15 O $19,636.36 O $25,384.62 O $32,727.27 Question 2 What is your capital gains tax? O $0. O $12,230.77 O $15,000.00 O $39,000.00 O $45,000.00
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
4
![(The following information applies to the two next questions.]
Suppose that you buy an office building for $1.2M. Approximately 40% of the value of the property
is land. You sell the property at the end of 3 years for $1.5M and take your full depreciation
allowance every year you hold the property. Right before you sell the property, you invest $600,000
to replace the roof and repave the parking lot. Your depreciation recovery tax rate is 25% and your
capital gains tax rate is 5%.
What is your depreciation recovery' tax?
O $9,230.77
$13,846.15
O $19,636.36
O $25,384.62
O $32,727.27
Question 2
What is your capital gains tax?
O so
O $12,230.77
O S15,000.00
O $39.000.00
O $45,000.00
42°F C](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3ca889a5-39d8-4110-8bb9-fb49ead6739e%2F6d097fb7-5421-4af4-a540-7157aeb8a95f%2Fxdqr1an_processed.jpeg&w=3840&q=75)
Transcribed Image Text:(The following information applies to the two next questions.]
Suppose that you buy an office building for $1.2M. Approximately 40% of the value of the property
is land. You sell the property at the end of 3 years for $1.5M and take your full depreciation
allowance every year you hold the property. Right before you sell the property, you invest $600,000
to replace the roof and repave the parking lot. Your depreciation recovery tax rate is 25% and your
capital gains tax rate is 5%.
What is your depreciation recovery' tax?
O $9,230.77
$13,846.15
O $19,636.36
O $25,384.62
O $32,727.27
Question 2
What is your capital gains tax?
O so
O $12,230.77
O S15,000.00
O $39.000.00
O $45,000.00
42°F C
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