fall_2009_part_3_property_transactions_template

fall_2009_part_3_property_transactions_template - Black...

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Black Hammock Nursery Real estate transactions Transaction: Cash sale Present value of cash outflows: Cost of new warehouse (370,000) Land cost 80,000 Warehouse cost 270,000 Less: Accumulated depreciation (69,228) Adjusted basis 280,772 Selling price 400,000 Gain on sale 119,228 PV of $1 (i=10%, n=1) 0.909091 PV of gain 108,389 Marginal tax rate 34% 36,852 (36,852) Land cost 74,000 Warehouse cost 296,000 Less: Accumulated depreciation (227,683) Adjusted basis 142,317 Selling price 175,000 Gain on sale 32,683 PV of $1 (i=10%, n=30) 0.057309 PV of gain 1,873 Marginal tax rate 34% 637 (637) Present value of cash inflows or tax benefits: Sales proceeds 400,000 Tax benefit from depreciation Cost of new warehouse & land 370,000 % allocated to warehouse 80% Allocated to warehouse 296,000 MACRS rate 2.564% Annual depreciation 7,589 PV annuity (i=10%,n=30) 9.426914 PV of total depreciation 71,545 Marginal tax rate 34% 24,325 24,325 Salvage value 175,000 PV of $1 (i=10%, n=30) 0.057309 10,029 10,029 Total 26,865 Tax on gain from sale of old warehouse Tax on gain from sale of new warehouse
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Black Hammock Nursery Real estate transactions Transaction: Installment sale
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