Depreciation-final year of operations

[artp]

Taxpayer, cattle rancher, sold all of his cattle in 2022 and got out of the business. He has sheds and out buildings that were used in his business and still have undepreciated cost that he wants to write-off in 2022. My understanding is the fact that the taxpayer decided to cease business does not effect the useful life of the asset and he can not simply write-off the remaining cost. I am correct? or am I missing something? Comments

[DANRVAN]

It might depend on his future intentions.  Does he plan on renting out the property?  Does he have any other business that will use the buildings?

[Abby Normal]

They weren't disposed of. He still owns them. Nothing until a final disposition happens.

You can use the ATX disposition code, 'removed for personal use,' to get the 2022 depreciation correct, BUT that will remove the asset from the fixed assets system and you'll lose track of the assets and the accumulated depreciation.

What I like to do is, use that code 'removed for personal use' and note the depreciation amount. Then clear out the disposition tab, override the current depreciation, and leave myself a note for next year to set the business use % to zero, by entering 0.001 in the business use percentage screen.

I do this because I want to keep the assets in the tax software. It's way too easy to forget about that old depreciation many years down the road.

If only ATX had a 'removed from service' date field so this could be more easily handled.

[DANRVAN]

18 minutes ago, Abby Normal said:

 

I do this because I want to keep the assets in the tax software. It's way too easy to forget about that old depreciation many years down the road.

If only ATX had a 'removed from service' date field so this could be more easily handled.

That is one of the reason I keep most depreciation schedules on a separate program (EasyACCT) so I am not relying on ATX for permanent records.

 

[artp]

Thanks for the replies and suggestions.

[Abby Normal]

6 hours ago, DANRVAN said:

That is one of the reason I keep most depreciation schedules on a separate program (EasyACCT) so I am not relying on ATX for permanent records.

 

I prefer it all in one place, and I don't want to risk making a data entry error. Also, it's a lot more work to have a separate, non-integrated fixed assets system.

[Lee B]

I used to maintain a separate system, but now I am using Drake whose depreciation system is a lot more user friendly than ATX.

[mcb39]

Because I am a "Paper Person", I keep a copy of the depreciation detail schedule in the client's file.