I am self-employed in the lawncare field and last year 2019 I had 2 mowers get damaged from normal use and can not be repaired. Transmission in rider is destroyed and is not cost effective to repair it, and engine in one of my commercial walkbehind mowers bent a crank and damaged the Blade Brake Clutch mechanism beyond repair, it is not usable and not cost effective to repair it as well. How do I dispose of these assets on Turbo Tax to show they are no longer usable and are there any tax implications for these assets being unusable now for 2019?
On the screen, "Tell US about this asset", click that item was sold, retired...
On the special handling screen, click yes as it was converted to personal use. There are no tax implications unless you took Section 179 for the asset at purchase. You may have to recapture depreciation if you did not use it for its entire useful life.
Unless you actually using the broken equipment for your personal use, don't say it was converted to personal use. You would enter it as a "sale" for $0.
The asset in question in our situation is non-functioning but involved in a lawsuit. Court date is April 2022! We are required to recapture the Sec 179 that was taken in 2017 but we still have ownership of the asset - thought that we could just say that the asset is "not in service". Is there a way to make that distinction?
Thank you.
Connie
Since you took the 179 deduction and the asset's basis is already zero then you can simply leave the asset on the books until you actually dispose of it after the lawsuit. Which you will "sell off" for a Zero sales price and there will be no recapture needed.