Open TurboTax

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
Announcements
Still need to file? Our experts can get your taxes done right. Get started >
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

cancel
Showing results for 
Search instead for 
Did you mean: 
arlington
New Member

I am closing biz after 10 yrs. I have an asset with 15 year depreciation schedule in form 4562. How do I depreciate the remaining 5 year balance in 2017 taxes?

 
1 Best answer

Accepted Solutions
KrisD
Intuit Alumni

I am closing biz after 10 yrs. I have an asset with 15 year depreciation schedule in form 4562. How do I depreciate the remaining 5 year balance in 2017 taxes?

If it is a tangible asset, such as machinery, you don't. Whatever value remains is the property of the business at closing and sold at a profit, loss, or wash to an outside entity or owner. 

For example, you depreciated a file cabinet but it has remaining value of $100. You either sell it for $150 and the business includes the gain of $50 before closing the books, sell it for $50 (no related parties) and claim the loss, or you figure it is worth $100 and transfer it to yourself at no gain and no loss. 

For an intangible asset, such as a franchise fee you can claim the remaining value. It can be done a couple different ways. You could sell the original asset as a wash in 2017. Then enter the remaining value as an expense with a description of "Intangible asset depletion". You could also enter the remaining value as a new asset with a 1 year depreciation for 2017. Because it is franchise fee, it is treated differently than a tangible asset and can be captured upon the business closing.

[Edited 02.27.2018 | 11:19AM]

View solution in original post

3 Replies
KrisD
Intuit Alumni

I am closing biz after 10 yrs. I have an asset with 15 year depreciation schedule in form 4562. How do I depreciate the remaining 5 year balance in 2017 taxes?

If it is a tangible asset, such as machinery, you don't. Whatever value remains is the property of the business at closing and sold at a profit, loss, or wash to an outside entity or owner. 

For example, you depreciated a file cabinet but it has remaining value of $100. You either sell it for $150 and the business includes the gain of $50 before closing the books, sell it for $50 (no related parties) and claim the loss, or you figure it is worth $100 and transfer it to yourself at no gain and no loss. 

For an intangible asset, such as a franchise fee you can claim the remaining value. It can be done a couple different ways. You could sell the original asset as a wash in 2017. Then enter the remaining value as an expense with a description of "Intangible asset depletion". You could also enter the remaining value as a new asset with a 1 year depreciation for 2017. Because it is franchise fee, it is treated differently than a tangible asset and can be captured upon the business closing.

[Edited 02.27.2018 | 11:19AM]

arlington
New Member

I am closing biz after 10 yrs. I have an asset with 15 year depreciation schedule in form 4562. How do I depreciate the remaining 5 year balance in 2017 taxes?

The asset has no value outside of the company. It is the purchase price of the franchise upon opening the doors. Franchise closes, the license disappears. Still no way to recover?
KrisD
Intuit Alumni

I am closing biz after 10 yrs. I have an asset with 15 year depreciation schedule in form 4562. How do I depreciate the remaining 5 year balance in 2017 taxes?

As an intangible asset, you can claim the remaining value. It can be done a couple different ways. You could sell the original asset as a wash in 2017. Then enter the remaining value as an expense with a description of "Intangible asset depletion". You could also enter the remaining value as a new asset with a 1 year depreciation for 2017. Because it is franchise fee, it is treated differently than a tangible asset and can be captured upon the business closing.
message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question
message box icon

Ready to start your taxes?

Hand off your taxes, get expert help, or do it yourself.

See Pricing
Manage cookies
v
ABCDEFGHIJKLMNOPQRSTUVWXYZabcdefghijklmnopqrstuvwxyz0123456789-_~