Question

Adjust Business Asset Value

Forum|Forum|6 years ago
February 16, 2020
1 reply
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Do I have to adjust business asset value after partial sale or is TT handling this with the information entered on Form 4797? ie, I have a lump of items listed as a single asset for depreciation, some of those item have been sold (for a loss) but TT appears to still depreciate on the original purchased value.

Carl11_2

Employee

You've got some work cut out for you.

First, you need to "break down" each item and enter it as an asset in your 2019 return. Your real task is going to be properly allocating the prior year's depreciation already taken, across each individual item so that the total of all depreciation already taken on each individual item, exactly matches that of the grouped items. One thing that will help make this easier is that the "in service" date for all items will be identical. Then you can delete the grouped items from your 2019 return and report the sale only of the items you sold in 2019.

F

fostermc11Author

I was afraid that this may be the case but it is doable. Where do I enter these sales in TT? All of these items sold were for a loss. I have been playing with a few scenarios and TT seems to want to delete any asset sale I record unless it is for a profit.

Thank you.

Carl11_2

Employee

Where do I enter these sales in TT?

That's the least of your concerns for now. You can't report the sale of anything in the group, until after you break up the group and get the assets entered individually and confirm that all the numbers match up spot-on perfect.

Once that's done, you'll work through each individual item that you sold one at a time and indicate that "I stopped using this asset in 2019". From there you will report your disposition - which in your case will be that you sold the asset. Then you'll be asked for the sales price and other pertinent sales information.

All of these items sold were for a loss.

That may not be true for all items. Remember, you have to recapture depreciation when you sell the asset. That recaptured depreciation is added to your sales price. If that adjusted sales price exceeds your cost basis, then you sold at a taxable gain.