Suppose a firm buys and asset, depreciates it over its 10-year MACRS life, and then sells it for...

Question

Suppose a firm buys and asset, depreciates it over its 10-year MACRS life, and then sells it for $100,000 15 years from the time it had bought it. Without performing any calculations, describe the tax consequences related to the assets purchase, depreciation, and sale

Robert · Accepted Answer

The tax consequences on: 
a) Purchase of property: No tax consequences 
b) Depreciation: Depreciation acts as a tax shield as the depreciation is deducted from 
the taxable income.  
As per MACRS Depreciaiton of 10 year, the whole property is 100% depreciated and 
used for tax purpose. Since,

Suppose a firm buys and asset, depreciates it over its 10-year MACRS life, and then sells it for $100,000 15 years from the time it had bought it. Without performing any calculations, describe the tax...

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