An automobile costs 25,000. For tax purposes, depreciation of 10,000 has already been deducted in the current and prior periods and the remaining cost of 15,000 will be deductible in future periods, either as depreciation or through a deduction on disposal. Revenue generated by using the automobile is taxable and any loss on disposal will be deductible for tax purposes. The tax rate is 25%. What is the tax base for this scenario?
A. 5,000
B. 15,000
C. 10,000
D. 3,750
The tax base for the automobile in this scenario is the remaining undepreciated cost of the automobile, which is the amount that can still be deducted for tax purposes in the future. Since depreciation of 10,000 has already been deducted, the remaining tax base is the portion that can still be claimed as a deduction. Therefore, the tax base for the automobile is the undepreciated cost, which is 15,000. As per the information provided, this amount will be deductible in future periods, either as depreciation or through a deduction on disposal.
So, the tax base for this scenario is B. 15,000.
