Question & Answers
How would you close this Balance Sheet (B/S) asset on the Final Return for S-Corp? Cost: 60K – Depreciation 32K = Book Value 28K Auto Loan (Liability) – 22K Auto was sold to the shareholder (S/H) for 45K (FMV). How would you 1) zero-out this B/S item on S-Corp return, 2) where are proceeds flowing and 3) how would you show that S/H had assumed this liability (if needed)?
0 Votes
2044 Views
Follow
4 Followers
4 Followers
1 Votes
(1) Assuming the shareholder paid cash and there is no depreciation recapture is necessary to record the sale I would credit the cost $60K, debit the accumulated depreciation $32K, debit auto loan $22, debit cash $23K (proceeds minus loan) and credit gain on sale of car $17K.
(2) Proceeds of $45K first go to pay off the loan of $22K and the remaining goes to cash. If the shareholder is not giving the corporation cash, but instead is taking the car and related loan as a distribution then (1) and (2) are slightly different [instead of cash of $23K it's a distribution of $23K].
(3) There is no more debt on the corporation's books so there's no assumed corporate liability. He now has a personal liability (if he assumed the loan).
(2) Proceeds of $45K first go to pay off the loan of $22K and the remaining goes to cash. If the shareholder is not giving the corporation cash, but instead is taking the car and related loan as a distribution then (1) and (2) are slightly different [instead of cash of $23K it's a distribution of $23K].
(3) There is no more debt on the corporation's books so there's no assumed corporate liability. He now has a personal liability (if he assumed the loan).
Related Questions...
- What year-end tax planning strategies (for individuals and small business) would you implement this year?
- Can I claim child tax credit for my son born on December 31?
- What is the amount of Advanced Learn Burn Technology tax credit that I can claim for purchasing 2009 Jetta 2.0L TDI?
- Is a credit card statement considered a viable replacement of a receipt for income tax documentation of expenses or are credit card slips still required?
- What is "IRS 8b Payout"?
