Q. You purchased a computer system which cost $50,000 5 years ago. At that time, the system was estimated to have a service life of 5 years with salvage value of $5,000. These estimates are still good. The property has been depreciated according to a 5 year MACRS property class. Now (at the end of year 5 from purchase) you are considering selling the computer at $10,000. What book value should you use in determining the taxable gains?

• (A) 8640
• (B) both corporations will have the same amount of net cash flows in year 1.
• (C) ajax corporation will have a larger net cash flow than gilbert in year 1.
• (D) gilbert corporation will have a larger taxable income than ajax corporation in year 1.