Bankrupt business and assets disposal

[ljwalters]

Client in home inspection (water damage, mold, etc) business for home buyers (not builders). No one buying homes hence no one paying for this inspection. Client got a w-2 job and quit working business. Client lost home filed for bankruptcy.

QUESTION what to do with the assets on record. Some were included in bankruptcy some are not.

Linda

[kcjenkins]

First thing you need to tell us is what happened to the assets? What sort of assets are we talking about? If he still has them, did he convert them to personal use, is just holding them until the business climate lets him go back into business, or what?

[ljwalters]

First thing you need to tell us is what happened to the assets? What sort of assets are we talking about? If he still has them, did he convert them to personal use, is just holding them until the business climate lets him go back into business, or what?

Client still has these assets. bankruptcy didn't want them. Still holding just in case the housing market goes back up and he is called for his services. Otherwise I guess you would just concider them converted to personal. One of the Camers for detecting Mold cost $11,000. He tried to sell it but wouldn't let it go for $3,000. Other problem some of the equipment was 1079 property 7 yr with 3 yrs left ( I warned them against this).

[kcjenkins]

Did you mean 179 property?

If he offered to surrender them, and the trustee did not want them, he should not have any income from them, just remove them from the asset list. Since he was insolvent at the time, he has no income to pay tax on. But his basis in them goes to zero, if he gets back into the business later. Use form 982 to report this.