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16 April, 08:33

Bill Holdfast owns a small retail property that he inherited from his father. There are no mortgages or interest expenses connected with the property. Bill takes an annual cost recovery expense of $5,000. The property has a monthly gross income of $1,500 and monthly operating expenses of $500. Bill's taxable income from this property will be taxed at a rate of 30%. What is the tax liability for the year?

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  1. 16 April, 10:47
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    Tax Liability = $2,100

    Explanation:

    given data

    annual cost recovery expense = $5,000

    monthly gross income = $1,500

    monthly operating expenses = $500

    tax rate = 30%

    solution

    we get here tax liability for the year that is express as

    Tax Liability = [ (Rent for 1 year) - Annual cost recovery expense - (monthly operating expense in 1 year) ] * tax rate ... 1

    put here value and we will get

    Tax Liability = [ (1500 * 12) - 5000 - (500 * 12) ] * 30%

    Tax Liability = $2,100
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