When the used asset is eventually sold for less than its depreciated book value:

Responses

The firm's tax liability is reduced by the amount of the difference times the ordinary income tax rate

The firm's tax liability is reduced by the amount of the difference times the ordinary income tax rate

there are no tax effects

there are no tax effects

there is a capital gain tax

there is a capital gain tax

then the difference is taxed as ordinary income

then the difference is taxed as ordinary income

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