Transfer of asset from one bussiness to another not correct

[molly1414]

I am closing one small business and opened another in 2025.   when i tell turbo tax that i stopped using the asset it gives me a large loss but i didn't sell it at a loss i transferred it to my other business.   It also is giving me depreciation twice even though i stopped using it on 01/01/2025.    I have tried to enter it many different ways and nothing works.   I am getting a large loss that i dont have and double depreciation.   

[ThomasM125]

You need to report the sale of the business assets at their books value, cost minus accumulated depreciation. The depreciation on those assets will be limited to what is allowed through the date you enter for the disposal of the business. When you enter the new business, enter the cost of the assets equal to their book value. Don't use any special depreciation on the new assets and they should be depreciated properly based on when you put the assets into service.

That way you will have no gain or loss on the business disposed of and the correct depreciation for the year. There may be some overlap in depreciation, as you are allowed to deduct depreciation as if the asset was put into service in the middle of the year even if that does not align with the date actually put into service.

[Mike9241]

Another means is on the first business to drop the business use to zero % with the first business

you may also have a problem if you took section 179 deduction on the asset when you placed it into service with the first business. Once use drops below 50% before being fully depeciated based on use regular MACRS rand the full life esults in recapture. 

[AmeliesUncle]

Are these both Sole Proprietor/Schedule C businesses?

The treatment depends on this question, so DON'T follow the other answer until you give us more information about the structure of the business.

[molly1414]

One that is closing is a farm and the new one is a schedule c sole proprietorship  

[DianeW777]

Based on your original comment about entering a date of 01/01/2025 my advice is as follows.  Keep in mind that the 'related party rules' apply so the asset(s) retain the exact same character in both the farm and the sole proprietor activity.

Gather all the information of your asset(s) in the farm:

• Cost
• Date placed in service
• Depreciation recovery period (5y, 7y, 10y, etc).

Next delete each asset in the farm, then enter them in the Schedule C with all the exact same information. The assets must retain their exact same details as though they were always in the sole proprietorship. Whatever is left for depreciation will continue until fully depreciated in the Schedule C.

Please update here if you have additional question and we will help.

@molly1414 

[AmeliesUncle]

I agree with Diane's answer - mostly.

The only potential additional thing to consider is if the Recovery Period or Method for Farm use is different than non-farm use (Farms have special rules).  I suspect that isn't going to be the case though.