Determine the tax implications, Basic Statistics

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Your firm purchased a line of computer equipment for $1.5M four years ago. It is assigned a CCA rate of 20% and the firm has a tax rate of 35%. At the end of this year (year 4 for the machine) you decide to sell the computer equipment and as a result you will terminate the asset pool. Calculate the tax implications under the following scenarios and classify each as a terminal loss, CCA recapture, or neither.

a. You sell the equipment for $691,200.

b. You sell the equipment for $2,000,000. 

c. You sell the equipment $1,000,000. 

d. You sell the equipment for $500,000.

e. The equipment is worthless. 

 

 


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