Question

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?

Answer 1

Tax Liability = $2,100

Step-by-step 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