Capital gains taxes Perkins Manufacturing is considering the sale of two nondep
ID: 1172138 • Letter: C
Question
Capital gains taxes Perkins Manufacturing is considering the sale of two nondep ecable assets x and Y Asset ? was purchased fo si 93 was purchased for S29,000 and wil be sold today for S35200 The firm is subject to a 40% tax rate on capital gains a. Calculate the amount of capitall gain, if any, realized on each of the assets b Calculate the tax on the sale of each asset and wil be sold today to S2340 Assen a. The capital gain realized on asset xss? (Round to the nearest dollar) Round to the nearest dollar) b. The tax on the sale of asset X is S (Round to the nearest dolar.) The tax on the sale of asset Yis4D (Round to the nearest dollar)Explanation / Answer
.Capital Gain means excess of sale price over purchase price. Tax will be levied only if capital gains do arise in sale of an asset.
a. The capital gain realized on asset X is $410. (2,340-1,930)
The capital gain realized on asset Y is $6,200. (35,200-29,000)
b. The tax on the sale of asset X is $164. (410*40%)
The tax on the sale of asset Y is $2,480. (6,200*40%)