A property is sold for $5,000,000 with selling costs of 3% of the sales price. The...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
A property is sold for $5,000,000 with selling costs of 3% of the sales price. The mortgage balance at the time of sale is $3,600,000. The property was purchased 5 years ago for $4,750,000. Annual depreciation allowances of $150,000 have been taken. If the tax rate is 28% for capital gain (price appreciation) and 30% for depreciation recapture, what is the after-tax cash flow from sale of the property? Tip: follow the four steps for partial points. Find before-tax cash flow from sale. Calculate the price appreciation. Then calculate all the taxes. Finally, subtract all the taxes from before-tax cash flow from sale. (2 points for each step, total of 8) A property is sold for $5,000,000 with selling costs of 3% of the sales price. The mortgage balance at the time of sale is $3,600,000. The property was purchased 5 years ago for $4,750,000. Annual depreciation allowances of $150,000 have been taken. If the tax rate is 28% for capital gain (price appreciation) and 30% for depreciation recapture, what is the after-tax cash flow from sale of the property? Tip: follow the four steps for partial points. Find before-tax cash flow from sale. Calculate the price appreciation. Then calculate all the taxes. Finally, subtract all the taxes from before-tax cash flow from sale. (2 points for each step, total of 8)
Expert Answer:
Answer rating: 100% (QA)
Sure lets break down the calculations step by step Step 1 Find beforetax cash flow from the sale Bef... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
Students also viewed these finance questions
-
The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-6. On December 12, Irene purchased the building where her store is located. She paid...
-
The following information is available for Wonderway, Incorporated, for the current year: Factory rent Company advertising Wages paid to laborers Depreciation for president's vehicle Indirect...
-
The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-5. Ivan's grandfather died and left a portfolio of municipal bonds. In 2012, they pay Ivan...
-
Refer to the facts presented in problem P7-13. In problem On January 25, 2011, Douglas Ltd. purchased 1,000 common shares of BMO (Bank of Montreal) for $65 each. During the remainder of 2011, Douglas...
-
The following data apply to a 125-kW, 2300-V, three-phase, four pole, 60-Hz squirrel-cage induction motor: Stator-resistance between phase terminals = 2.23 . No-load test at rated frequency and...
-
Do all intangible assets require amortization? Why or why not?
-
Endophyte is a fungus Neotyphodium lolli, which lives inside ryegrass plants. It does not spread between plants, but plants grown from endophyteinfected seed will be infected. One of its eects is...
-
The following data are from the income statements of Huntsinger Company. (a) Compute for each year(1) The inventory turnover and(2) The average days to sell the inventory.(b) What conclusions...
-
1 Define Management? 2 Define Leadership? 234 4 Explain the Qualities of a successful leader? Define transformational leadership? 5 Explain about Decision making process? Explain the types of...
-
Required Edutech Ltd is an online education institution that provides online education to tertiary learners who are pursuing undergraduate degrees, certificates, and diplomas. Edutech Ltd expanded...
-
Is Wuthering Heights a more romantic novel than Frankenstein? Why or why not?
-
Identify a firm and document its alliance activity over the past five to ten years (visit the Web site of a public firm, particularly the history page). Examine the list of officers at the company...
-
As part of a corporate restructuring, your analysis helps you conclude that you have rather extensive redundancy in corporate finance and accounting positions. Management concludes that through...
-
Suppose that the following table represents the market share percentage for each firm in the baby food market in Sweden. a. Calculate the three-firm concentration ratio for the baby food industry...
-
Pick a firm of interest to your group. Identify potential acquisition candidates. Explain why these companies would make sense as an acquisition target. Evaluate and describe possible implementation...
-
(a) Craft a vision and mission statement for your business school and then for your college or university as a whole. How are these statements related? How are they similar? How do they differ? How...
-
Question #3 using Itep, Who Payshttps://itep.sfo2.digitaloceanspaces.com/whopays-ITEP-2018.pdf Whydo low-income people in the states of Washington and Texas pay agreater share of their incomes in...
-
What did Lennox gain by integrating their WMS, TMS, and labor management systems?
-
Olive Corporation was formed and began operations on January 1, 2012. The corporation's income statement for the year and the balance sheet at year-end are presented below. The corporation made...
-
Carl and Jenny adopt a Russian orphan. The adoption takes 2 years and two trips to Russia and is final in 2012. They pay $6,000 in 2011 and $7,500 in 2012 of qualified adoption expenses, and have AGI...
-
Mike purchases a heavy-duty truck (5-year class recovery property) for his delivery service on April 30, 2012. The truck is not considered a passenger automobile for purposes of the listed property...
-
As an illustration of the difficulty in identifying monopolies, try to decide which of the following are monopolies: a train operating company; your local evening newspaper; the village hairdresser;...
-
Will competition between oligopolists always reduce total industry profits?
-
In which of the following industries is collusion likely to occur: bricks, beer, margarine, cement, crisps, washing powder, or carpets? Explain why.
Study smarter with the SolutionInn App