You Purchased an Automated Mailing System Which Cost $50,000 Five

question 2

Essay

You purchased an automated mailing system which cost $50,000 five years ago. At that time, the system was
estimated to have a service life of 5 years with salvage value of $5,000. These estimates are still good. The
property has been depreciated according to a 5-year MACRS property class. Now (five years from purchase)
you are considering selling the system at $10,000.
(a) What book value should you use in determining the taxable gains?
(b) What is the net proceeds from sale, assuming that the tax rate is 35%?

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Definitions:

Bodily-Kinesthetic Intelligence

A type of intelligence defined by Howard Gardner that involves skill in physical movement and the use of the body to express ideas and feelings.

Professional Basketball

A level of basketball competition that involves athletes who receive payment for their performance and is organized by leagues worldwide.

Practical Intelligence

A form of intelligence that involves the ability to resolve real-world problems through adaptive or creative reasoning and effectively apply knowledge and skills in everyday situations.

Sternberg

Robert Sternberg is a psychologist who proposed the triarchic theory of intelligence, which includes analytical, creative, and practical intelligence.