ASSET Disposition

[Terry D EA]

Truck Driver client was over the road owner-operator. Client apparently didn't think it was necessary to make truck payments and the truck was repossessed. Business began last year as a sole-proprietor with beginning depreciation on the truck. How is this dispostion treated? I have not had to deal with a respossessed asset disposition before and any help is appreciated.

Terry D.

[kcjenkins]

Think of it as a sale, for the amount that was canceled by the reposition. The Pub on handling this is pretty good, I'd follow the example in there.

[RoyDaleOne]

No depreciation if, in the same year, an asset is acquired and is disposed.

[Terry D EA]

You are right but he bought the truck in 07 and it was repossessed in 08

Terry D.

[RoyDaleOne]

My apologies. However, "Business began last year as a sole-proprietor with beginning depreciation on the truck. How is this disposition treated?" this statement implied the business began in 2008, and I assumed the depreciate you were asking about was for 2008 and not 2007. Sorry about that.

[Julie]

I'm dealing with one of these (but from 1998-2000--don't ask) The letter from the collection agency lists the amount that they got for the truck, and how much he still owed. I treated that as a sale price, because they applied that amount to his debt.

So...ATX has your depreciated basis from last year. Just put in the sale date and the amount they got for it at auction (or whatever) on the dispositions page. If he still owes them (mine does) he'll probably have a tax loss. Apparently these things are never cancelled, and they owe the remainder forever. (Of course, yours may have a 1099-C....but mine doesn't.) 4797 should generate normally.

My apologies. However, "Business began last year as a sole-proprietor with beginning depreciation on the truck. How is this disposition treated?" this statement implied the business began in 2008, and I assumed the depreciate you were asking about was for 2008 and not 2007. Sorry about that.

[Terry D EA]

Thanks for all of the replies and help. So far, my cleint did not get the 1099C but you never know. RoyDaleOne, no apologies necessary my original post wasn't very clear.

Terry D.