Q:

Subject: Question 4 Guru

 

Kerry,

 

Your site is very informative and I extend many thanks. 

Would you have the time to field a question?

 

I am considering purchasing a SUV ($30K) & tools ($12K) for the company (S-corp) in year 2006, all of which would be have 100% business use.

I would like to make a sec 179 election for $37k ($25k+$12k).

What would be the impact of selling the SUV in '07, '08 for:

$20k?

$15K?

$10k?

 

Please advise,

A:

If you are serious about running a business properly and staying out of trouble, you should be working directly with a professional tax advisor who can help you with basic concepts such as this.

If you expense the full cost of an asset via depreciation or Section 179, your adjusted cost basis (aka book value) becomes zero.  If you ever sell that asset at any time for more than zero, the full amount is taxable gain (aka depreciation recapture). 

If you didn't expense the full cost, whatever is left is your adjusted cost basis and any gain is the excess of the sales price over that amount.

There is no taxable gain if the asset is traded in on a new like kind asset.

I have covered this issue in several previous posts, such as:

November 2004

February 2005

October 2004

Again, any competent tax pro can help you with this kind of thing

Good luck.

Kerry Kerstetter

Follow-Up:

Kerry,

 

I have a CPA who I is competent.  However, I am concerned with 2 things 1) asset protection and 2) tax liability.  I am interested in obtaining a second opinion and would be willing to pay for it.  Would you consider fielding questions for hire?

 

Please advise,

My Reply:

If your CPA couldn't answer those very basic questions you sent me earlier, you really should be looking for another tax pro.

I wish I could help you; but I already have too many clients to take care of; so we are not accepting any new ones at this time.

Unfortunately, we don't have anyone else to whom we could refer you. If you haven't already done so, you should check out my tips on how to select the right tax preparer for you. 

Good luck.

Kerry Kerstetter

 

Labels: 179

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 3/26/2006 06:39:00 PM Send this post: