Question: Twelve years ago Mr and Mrs Chang purchased a business
Twelve years ago, Mr. and Mrs. Chang purchased a business. This year, they sold the business for $750,000. On date of sale, the business balance sheet showed the following assets:
The sales contract allocated $40,000 of the purchase price to accounts receivable, $515,000 to inventory, and $70,000 to furniture and fixtures. Assuming that the Changs’ marginal tax rate on ordinary income is 33 percent and their rate on capital gain is 15 percent, compute the net cash flow from the sale of their business.
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