Question

Unsold assets with final LLC tax return

Forum|Forum|6 years ago
March 4, 2020
2 replies
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I had a small printing business I ran from my home. I have three pieces of equipment that I've been depreciating during the course of business over the last several years. They were placed "in service" on 1/1/2015 on a 7 year MACRS. I shut down last year and am trying to file my final tax return. There is value for the equipment that I plan on selling, I just haven't gotten around to selling them. The value of the equipment is probably close to the depreciable amount remaining, so I'm wondering how to handle it on my final return. Do I have to sell the equipment before I submit my final return or should I just enter a date of disposal for the equipment on my return?

TurboTax Business Windows

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Anonymous_

Employee

You do not necessarily have to sell the assets (to a third party, for example), but you do have to indicate that the LLC disposed of them (such as in a distribution to the members).

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atkinson4738Author

Ok, perfect. Do you know how I go about distributing them on my taxes? I have listed the disposal date, is that all that has to be done? Since I am distributing it to myself, would I then need to pay taxes on the value? I wouldn't assume so since my capital account won't be covered with the equipment I am distributing.

Carl11_2

Employee

I am assuming you are filing SCH C.

Let's say you have 7 assets and in your disposition of the business you only sold 4 of them and decided to keep the other 3 for your own "personal use" and not sell them with the business.

On the assets you will not be selling, work through each one and indicate that "I stopped using this asset in 2019". Then on the next screen, "Special handling required?" select YES. This indicates that you did not sell the asset, but you removed it for your personal use. If you select NO then you will be *forced* to enter sales information. You don't want to do that since you did not "in fact" sell those assets.

For the remaining assets you sold, you will report them as sold. If you sold the business at a gain, then you must show a gain on all assets actually sold - even if that gain is only $1 on some of the assets.

If you sold the business at a loss, then you must show a loss on all assets, even if that loss is only $1 on some assets.

Otherwise, if you show a gain on some assets and a loss on others, the TurboTax program will sometimes (not always) screw things up on the 4797 and/or the SCH D, and you won't have the first clue that's happened either.

If your business carried inventory, keep in mind your EOY Inventory Balance for 2019 "MUST" be zero also. Either report that inventory as sold, allocating some of your sales price to it, or indicate it was removed for personal use.

If your business claimed "any" vehicle use in "any" year it was open, you need to show disposition of the vehicle too. I doubt you sold the vehicle as a part of the business. So work through the Vehicle Expenses section and just indicate the vehicle was "removed for personal use" that that takes care of that.

If everything is done correctly, then the SCH C should not be imported next year on the 2020 return. If it is imported, then it's for one of two reasons.

1) You told the 2020 program that you "DO" have a business in 2020 or;

2) You did not totally and completely show the disposition of the business on the 2019 return.

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atkinson4738Author

Sorry, should have clarified. It is a multi member LLC (my wife and myself), so I am filing 1065.

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Anonymous_

Employee

@atkinson4738 I would suggest that you read through the recommended answer in the thread at the link below (although it involves a buyout and not the scenario where the only members of the LLC are a married couple).

https://ttlc.intuit.com/community/business-taxes/discussion/re-purchased-partner-s-50-ownership-of-an-llc-on-november-1/01/1067301#M37735