A Corporation Is Selling an Existing Asset for $1,000

question 105

Multiple Choice

A corporation is selling an existing asset for $1,000. The asset, when purchased, cost $10,000, was being depreciated under MACRS using a five-year recovery period, and has been depreciated for four full years. If the assumed tax rate is 40 percent on ordinary income and capital gains, the tax effect of this transaction is ________.

• A) $0 tax liability
• B) $1,100 tax liability
• C) $3,600 tax liability
• D) $280 tax benefit

Analyze the implications of assigning and negotiating property rights in different contexts.

Understand the concept of environmental economics and its approach to managing pollution and external costs.

Understand the fundamental principles of tort liability.

Grasp the concept and application of duty of care in negligence.

---

Definitions:

Krishna

A major deity in Hinduism, worshipped as the eighth avatar of the god Vishnu and celebrated for his teachings in the Bhagavad Gita.

Qutb Minar

A UNESCO World Heritage Site located in Delhi, India, known as the tallest brick minaret in the world, built in the early 13th century.

Soaring Height

Achieving a very high level, elevation, or degree, often figuratively in terms of ambition, achievements, or physical structures.

Victory of Islam

Refers to the historical and religious expansion of Islam, marked by conquests and the spread of Muslim culture and religion starting in the 7th century.