Tax Depreciation Shelters a Portion of Annual Operating Income from Taxation

question 17

Multiple Choice

Tax depreciation shelters a portion of annual operating income from taxation. However, the amount of cumulative tax depreciation is taxed when the property is sold. Suppose that your taxes due on sale will be $35,000 greater than if the property had not been depreciated. If the sale were to occur 5 years from now, determine the present value of the tax on depreciation recapture in the year of sale assuming a discount rate of 9.5%.

• A) $22,233
• B) $31,963
• C) $55,098
• D) $134,390

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Definitions:

Neurotic Needs

Psychological needs that can lead to anxiety and unrealistic desires or expectations when they are not met.

Categories of Behaviors

Classifications or groupings of actions or reactions of individuals according to certain criteria or based on observed patterns.

Basic Anxiety

A term introduced by Karen Horney, referring to feelings of helplessness and insecurity that arise from early childhood experiences, influencing adult behavior.

Lonely

A complex and usually unpleasant emotional response to isolation or lack of companionship.