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In: Accounting
Use the following information to answer questions 3-5. Five years ago you purchased a small apartment...
Use the following information to answer questions 3-5.
Five years ago you purchased a small apartment complex for $1 million. You borrowed $700,000 at 7 percent for 25 years with monthly payments. The original depreciable basis was $750,000 and you have used 27 1/2- year straight-line depreciation over the five year holding period. Assume no capital expenditures have been made since acquisition. If you sell the property today for $1,270,000 in a fully taxable sale:
3. What will be the taxes due on sale? Assume 6 percent selling costs. 33 percent ordinary tax rate, a 15 percent capital gain tax rate, and a 25 percent recapture rate.
4. What will be the after-tax equity reversion (cash flow) from the sale?
5. Over the entire five-year holding period, how much were your taxes from rental operations reduced by the annual depreciation deductions? Ignore the increased taxes ue on sale.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
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The annual $11,990.81 rental payment includes $1,000 insurance
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6
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Use the information below to answer questions 3 through
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Required information Use the following information to answer questions [The following information applies to the questions...
Required information
Use the following information to answer questions
[The following information applies to the questions
displayed below.]
The following information is available for Lock-Tite Company, which
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costing system.
April 30
May 31
Inventories
Raw materials
$
31,000
$
30,000
Work in process
9,500
18,200
Finished goods
54,000
34,000
Activities and information for
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Raw materials purchases (paid
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Factory payroll (paid with
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5’…TAC ACC GAT GGA TAA GTC…3’ DNA Coding
strand
3’…ATG TGG CTA CCT ATT CAG…5’ DNA template
strand
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You purchased a house five years ago and borrowed $400,000 . The loan you used has...
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loan you used has 300 more monthly payments of $1,686 each,
starting next month, to pay off the loan. You can take out a new
loan for $355,625 at 2.00% APR compounded monthly , with 300 more
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save in present value terms by using the...
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