Ok that makes sense on how to enter it assuming every asset you have ever had has to have the depreciation recaptured….
That's only if you sell at a gain.Say you've got a washing machine that's 3 years into it's 5 years of depreciation and it breaks. You have to buy a new one. For the two years remaining depreciation on the broken washer, it's deductible and becomes a permanent deduction since it obviously can't be sold at a gain or a loss. There's several ways to handle it in TTX. One way, is to report it sold for $0. If you're not selling all of the assets in the same year, the remaining depreciation is considered a loss. Depending on the numbers for that tax year, the remaining depreciation would be included in the PAL carry over losses.
but people talk about putting the FMV value of the items as the selling price or zero for old appliances that aren’t worth anything….
When you use the original cost basis as the selling price, then all of the depreciation is still recaptured and taxed at the ordinary income tax rate.
I guess the bottom question is if the IRS expects to recapture all the depreciation you have ever taken on all assets on your list regardless of their current status or condition…
It's not a guess. The IRS requires you to recapture all depreciation taken on an asset when sold at a gain. Due to programming limitations in the TTX program, when you sell the property at a gain you "will" pay tax on that depreciation taken on all assets one way or another - either correctly at the ordinary income tax rate, or incorrectly at the capital gains tax rate.
.your method would recapture all that depreciation but I am still unsure if I need to report a gain on say a 8 year old appliance
if you sell the property at a gain, you sell "all" of it it a gain. Likewise, if you sell the property at a loss, you sell "all" of it at a loss. I agree it seems counter-intuitive to sell a year's old appliance at more than you paid for it. But on the other side of that coin, it is not at all weird to sell a 20 year old structure for more than you paid for it. Heck, the structure the appliance is in, is older than the appliance. Think that one through. 🙂
