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Tax_on_disposal_of_assets - SellingPrice Case4SP>Cost Cost...

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Tax on disposal of assets Selling Price Case 4 SP>Cost Cost Case 3 SP<Cost SP>BV Accumulated Depreciation Case 1 SP=BV Current Book Value Case 2 SP<BV time Case 1 Asset is sold for current book value [no gain or loss no tax consequences] Case 2 Asset is sold for less than current book value [tax savings = TAX o x (BV SP)] Case 3 Asset is sold for more than current book value but less than original cost [tax due = TAX o x (SP BV)] Case 4 Asset is sold for more than original cost [tax due = TAX o x (Cost BV) + TAX c x (SP Cost)] TAX o ordinary income tax
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