Final answer:
The statement is false because sales proceeds received at the end of the life of an asset are taxable only to the extent they exceed the asset's adjusted basis. The nature of the tax, whether as a capital gain or ordinary income, also depends on specific details related to the depreciation and type of asset.
Step-by-step explanation:
If salvage value is ignored in depreciating an asset for tax purposes, it’s not accurate to say any sales proceeds received at the end of the life of the asset are fully taxable as income. When an asset is sold, the tax implications are generally based on the difference between the sales proceeds and the asset’s adjusted basis, which is its original cost minus any accumulated depreciation.
For tax purposes, if an asset is sold for more than its adjusted basis, the excess is usually treated as a capital gain rather than ordinary income. On the other hand, if the sales proceeds are less than the asset’s adjusted basis, there could be a capital loss. Therefore, the statement is false. Sale proceeds in excess of the asset's adjusted basis would generally result in a tax liability. However, the nature of such proceeds — whether they are taxed as ordinary income or as capital gains — depends on various factors including how much depreciation has been claimed and the nature of the asset.