Tax Aspects of Dealership Asset Sales

                                                                Capital Gain or
Category                                                 Ordinary Income             Federal Tax Rate to Seller

Inventory                                                Ordinary Income               Maximum Rate of 35%

Fixed Assets - machinery, shop
furniture, company vehicles                     Ordinary Income               Maximum Rate of 35%

Intangible Assets – goodwill,
franchise value, customer lists                Capital Gain                      Maximum Rate of 15%

Non-Compete Agreement                      Ordinary Income               Maximum Rate of 35%

Land                                                        Capital Gain                      Maximum Rate of 15%

Buildings                                                 Capital Gain                 Maximum Rate of 15%
Recapture of Depreciation                                                              Maximum Rate of 25%

Other Income Sources Resulting from the Sale:

Rental Income                                        Ordinary Income               Maximum Rate of 35%

Consulting Income                                 Ordinary Income               Maximum Rate of 35%

Wages                                                    Ordinary Income               Maximum Rate of 35%

For more information, please e-mail Paul McGovern at pmcgovern@downeycocpa.com or call 800-849-6200.