Research Clinic purchased a blood-testing machine 4 years ago for $96,000. It is being depreciated under MACRS with a 7-year recovery period using the percentages given in Table 4.2 on page 166. Assume a 30% tax rate.

Table 4.2:

a. What is the book value of the blood-testing machine?
b. Calculate the clinic’s tax liability if it sold the blood-testing machine for each of the following amounts: $120,000; $26,000; $231,200; and $21,000.

Transcribed Image Text:

TABLE 4.2 Recovery year 1 2 3 4 56700 8 9 10 11 Totals Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes 3 years 33% 45 15 7 100% Percentage by recovery year" 5 years 7 years 20% 14% 25 18 12 32 19 225 12 12 100% 9 9 9 100% 10 years 10% 18. 14 12 9 8 7 6 6 6 100%