1. Business
  2. Accounting
  3. mrs o is negotiating to purchase a tract of land...

Question: mrs o is negotiating to purchase a tract of land...

Question details

Mrs. O is negotiating to purchase a tract of land from DC Company, a calendar year taxpayer. DC bought this land six years ago for $480,000. According to a recent appraisal, the land is worth $800,000 in the current real estate market. According to DCs director of tax, the companys profit on the sale will be taxed at 35 percent if the sale occurs this year. However, this tax rate will definitely decrease to 21 percent if the sale occurs next year. Mrs. O is aware that DC would prefer the sale close next year. However, Mrs. O needs the land immediately to begin construction of a new retail outlet. She offers to pay $875,000 for the land with the stipulation that the sale close by December 31. a. Calculate the amount of after-tax cash for the each of the following alternatives b. Should DC accept Mrs. Os offer? Complete this question by entering your answers in the tabs below. Required A Required B Calculate the amount of after-tax cash for the each of the following alternatives
Solution by an expert tutor
Blurred Solution
This question has been solved
Subscribe to see this solution