ajuroff Posted February 26, 2008 Report Posted February 26, 2008 S Corp started March 1, 2007. Put into service a Semi, with a purchase price of $13,000. (client says got a great deal, the value of the Semi at the time of purchase was $20,000 - seller needed money) On November 6, 2007, Semi was in an accident and was totaled. Insurance proceeds for loss of semi was $29,000. S Corp then purchased a replacement Semi on December 1, 2007, for $7,000. (again, another deal as value of this semi was $12,000 but seller was anxious as he was retiring) I'm having brain issues when it comes to reporting this on the 1120S. I have something in mind but am looking for opinions. (and it's only Tuesday) Thanks! Quote
JohnH Posted February 26, 2008 Report Posted February 26, 2008 My brain is fried as well, but I think you just follow the money and ignore the FMV on both vehicles. Quote
Maribeth Posted February 26, 2008 Report Posted February 26, 2008 Okay, I haven't done one of these for awhile. Involuntary conversion. Basis of the truck stays on the books at $13,000. Received $29,000, used $7,000, gain recognized is $22,000. Maribeth Quote
BulldogTom Posted February 26, 2008 Report Posted February 26, 2008 How about forget the involuntary conversion. Truck #1 Disposition - Sale price 29 minus basis 13 = 16 gain Truck #2 - Basis = 7 start depreciating Keep it simple Tom Lodi, CA Quote
kcjenkins Posted February 26, 2008 Report Posted February 26, 2008 Maribeth is right, IF you go with the involuntary conversion. However, Tom is right, if you treat the insurance as a sale of the old, which it was, and then you treat the purchase as a separate transaction, which it was. And a better tax outcome, as well. I'd do it Tom's way, in a NY minute. Quote
Maribeth Posted February 26, 2008 Report Posted February 26, 2008 Yep, I like Tom's way better also. I don't believe that there is anything mandatory about using the involuntary conversion process so use the sales. Maribeth Quote
ajuroff Posted February 27, 2008 Author Report Posted February 27, 2008 Thanks to all of you. Those were to two ways I was going back and forth with. Then I was doubting myself. (you know how that goes) I did use "Tom's way" and of course, better results when it comes to the K-1's. Thanks again. I really appreciate this board! Amy Quote
BulldogTom Posted February 27, 2008 Report Posted February 27, 2008 Sinatra originally sang the song "Tom's Way", but it did not work out so well, so he changed it. Bet you didn't know that one? ;o) Tom Lodi, CA Quote
ajuroff Posted February 28, 2008 Author Report Posted February 28, 2008 :lol: "I did it Tom's waaaaaaayyyy" Quote
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