Closing a schedule c business due to retirement

Forum|Forum|2 years ago
April 7, 2024
1 reply
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I am retiring and closing my business. All assets will be converted to personal use. I've gone through each asset and marked it for special handling. However, when I get to the home office it's asking for a sales price. There is no sales since it's being converted to personal use. What do I enter here? If I enter 0 I show a loss on schedue 1 that appears to be the difference between basis and depreciation taken. Is this correct? Also, I have expenses not deducted in prior years ( operating expenses and depreciation not allowed.) What happens to these if I closed the business.

PatriciaV

Employee

Home Office Expense carryovers are available as long as you stay in business. Once the business closes (and you no longer have a home office), the carryovers are lost.

Unless you sold the residence where you had a home office, do not report a "sale." Instead, edit the property on the Home Asset Summary page. On the page "Did you stop using this asset in 20XX?" answer Yes. Enter the date you stopped using it as a home office. Continue to the page "Disposition of this home office" and the question "Did you actually sell your home in 20xx?" Answer NO. This will avoid any questions about sales price.

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AFR124Author

Thanks for taking the time to answer my questions. I did answer the questions as you suggested, however, this leads to a "loss" on form 4797 which then transfers to schedule 1 and then to the 1040. This significantly reduces my gross income. The loss is the exact amount of my original basis - deprection to date. Is this correct? It's like taking a deprection deduction after the business is closed.

Also, I'm using TurboTax Deluxe, not business and farm.