Problempatriot industries recently sold its fin fabrication, Ask an Expert

Accounting

Problem:

Patriot Industries recently sold its fin fabrication machine for $150,000. The machine originally cost $500,000 and has a current book value of $100,000. Patriot's marginal tax rate is 35 percent for ordinary income and 35 percent for capital gains income.

Required:

Question 1: What amount of gain has Patriot received from this transaction?

Question 2: Is this a capital or ordinary gain?

Question 3: How much tax must Patriot pay on this transaction?

Note: Show all workings.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91171602

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