Business closure

[J R Sandoval EA]

Client lost his only janitorial account and closed his business last year; he had some equipment (fully depreciated) that he donated to a school and two vehicles also fully depreciated that he kept. Can any one tell me where to find in depth information to properly report this asset disposition?

Thanks

[Margaret CPA in OH]

You could begin with Form 4797. If using ATX, go to the Asset Entry tab and click on the bottom tab Dispostions or Bulk Dispositions. One of the options is Sale/Abandonment which the client is doing. Because it was fully depreciated, the basis is 0 so there is no contribution deduction and no sale value. If input properly, all the information flows nicely. Check to see if there might be any 179 recapture, though.

[Ray in Ohio]

Client lost his only janitorial account and closed his business last year; he had some equipment (fully depreciated) that he donated to a school and two vehicles also fully depreciated that he kept. Can any one tell me where to find in depth information to properly report this asset disposition?

Thanks

My question is..... Do you have to report this?? I have never really encountered this. Off the top of my head, I cant think of a reason you would have to.

(But, the top of my head might be a bit murky this time of the year.)

[Margaret CPA in OH]

In my opinion, unresearched at this moment, I would report it just to tie up any loose ends. These were business assets and it closes the books, so to speak, on the purchase, use and ultimate disposition. Why not report it?

[Ray in Ohio]

Good answer Margaret. I also see no reason why not to report it, if a person is so inclined. (other than the time and fee) but fees are good for us!!

[TAXBILLY]

Equipment donated: sold at zero.

Vehicles kept: disposition is : converted to personal use. When and if he sells them he will possibly have a gain.

taxbilly

[OldJack]

Client lost his only janitorial account and closed his business last year

Don't you think that the answer you get here would depend upon you telling us if this is a proprietorship, partnership, S-corp, or C-corp entity? How it is treated may depend upon the type of business.

[J R Sandoval EA]

Don't you think that the answer you get here would depend upon you telling us if this is a proprietorship, partnership, S-corp, or C-corp entity? How it is treated may depend upon the type of business.

Client is a sole proprietorship

[Terry D EA]

Now that you have stated your client is a sole-proprietor, follow Margaret's advice.

Terry D.