Problem Set 4 Key - AAE 320 Problem Set#4 Answer...

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Unformatted text preview: AAE 320 Problem Set #4 Answer Key (Prepared by Phil Harris) Question 1 Sale Price Depreciation Basis Gain (from facts) (from facts) (from facts) Feed 90,000 raised NA 90,000 Feeder calves 25,000 raised NA 25,000 Beef heifers 12,000 raised NA 12,000 Beef cows 40,000 raised NA 40,000 Machinery 155,000 220,000 100,000 120,000 35,000 Buildings 20,000 60,000 60,000 20,000 Land 500,000 175,000 175,000 325,000 Total 842,000 455,000 160,000 295,000 547,000 Question 2 Capital gains Feed 90,000 90,000 Feeder calves 25,000 25,000 Beef heifers 12,000 Beef cows 40,000 Machinery 35,000 Buildings 20,000 Land 325,000 Total 162,000 115,000 385,000 Question 3 Tax on all ordinary income 1 Total ordinary income from asset sales 162,000 2 Other ordinary income 20,000 3 Total ordinary taxable income 182,000 4 Bottom of 28% bracket (from tax table) 131,450 5 Excess over bottom of 28% bracket (line 3 minus line 4) 50,550 6 28% tax rate 0.28 7 Tax on excess over bottom of 28% bracket (line 5 x 28%) 14,154 8 Tax on income in lower brackets (from tax table)...
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This note was uploaded on 08/08/2008 for the course AAE 320 taught by Professor Mitchell during the Spring '08 term at University of Wisconsin.

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Problem Set 4 Key - AAE 320 Problem Set#4 Answer...

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