Moving Property to another LLC and transfer depreciation table

[RobertB4444]

@Rockdog10  Not really.  Just finish the old LLC return first.  Then you'll have the final numbers for depreciation and everything for the asset.  Enter those final numbers as the beginning numbers manually in to the new company and you're set.

[Carl]

Enter those final numbers as the beginning numbers manually in to the new company and you're set.

It's a bit trickier than one might think. If you find the first year depreciation with the new company is wrong, just holler. 🙂

[Rockdog10]

This certainly is quite challenging to do manually since we have over 100+ items from previous years.  I had an idea of doing a "save-as" from the previous LLC and just change the LLC information to the new one to transfer the existing depreciation table over.  Any possible issues with doing this if I clean up all the other items from the old LLC file?

[Carl]

I had an idea of doing a "save-as" from the previous LLC and just change the LLC information to the new one to transfer the existing depreciation table over.

Oh, if it were only that simple. When it comes to taxes, if it was easy, you did it wrong. 🙂

[RobertB4444]

Not at all - as long as you're careful to remove any lingering data from the old company.

[Rockdog10]

Now, I am realizing how 'tricky' this is.  From my old LLC, for all existing assets to be transferred to the new LLC, would I select the option "sold" or "disposed of by some other means" on why I stopped using this asset.  If so, would I select the "sold" price as the depreciated value so it would not trigger a gain or loss in my existing return.  I somehow need to registered that I stopped using this asset on 9/30/2021 without saying there was a change in ownership since the ownership of the two LLCs are the same.  Any ideas on this?

[Carl]

@Rockdog10 now you see the issue. Here's how you do it correctly.

For the old business for each individual asset indicate "I stopped using this asset in 2021" and enter the date you stopped using it. On the "Special Handling Required?" screen, read the small print to understand why I am telling you to click YES. Then click YES.

Now add together the amount of prior years depr and current year depr to get the total depr taken on that asset up to the date you stopped using it. It's up to you to save that information somewhere outside of TurboTax, because you will 100% need that amount at sometime in the future. I guarantee it.

When you enter the asset in the new business, the cost basis of that asset in the new business will be the original cost basis from the old business *MINUS* the total amount of depreciation already taken on the asset in the old business. Your in service date for the asset in the new business can not be earlier than the opening date of the new business and *must be* at least one day *after* it was removed from service in the old business.

Depreciation will start over from the 1st year using the new, adjusted cost basis. So the yearly depreciation on the asset in the new business, will be lower than the yearly depreciation was on the asset in the old business.

Now, it's up to you to keep track of the original cost basis and depreciation taken in the old business. When you sell or otherwise dispose of the asset later in life, you will have to account for that depreciation in the tax year you sell or otherwise dispose of the asset. If you don't, then the depreication from the old business will be included in capital gains and taxed at the higher capital gains tax rate, instead of the "ordinary" income tax rate.

[Anonymous_]

Read @Rick19744's post again (above). 

[TheGenCom]

Hi Rick19744,

Thanks for this explanation of how to transfer a depreciation schedule from one LLC to another, when the ownership of the divided and recipient partnerships remain the same and there is essentially "no change" to the ownership of the property.  I am in the exact same situation this tax season.  

At the end of your post, your recommendation was to work with a tax professional on this.  I am more of the "do it yourselfer" persuasion (which is why I use TurboTax to do my taxes).  After looking into the different button and options available to me in TurboTax Business desktop, I don't see the buttons to do what you are recommending.  Is there a way to do what you are recommending in TurboTax Business desktop?  Or is the software limited, where doing this isn't possible.  If it is possible, would you be willing to detail what buttons to push and what pulldowns to choose to do what you are suggesting?  

Best regards,

Andrew (TheGenCom)

[AmyC]

For professional help, you would need to use the online software, TurboTax Business.

You are welcome to ask for help here in the community and we will do our best. I have to agree, having someone do your taxes this year, makes a lot of sense.

[TheGenCom]

After talking to my tax professional, this is how I accomplished this with TurboTax Business Desktop.  

1. In the tax return with the "old" partnership, enter that you disposed of the property by selling it.
   1. For each asset on the depreciation schedule, enter a rough estimate for what the item was sold for, and on the next screen the software will say what was your gain or loss.
   2. Do math to calculate a zero gain (your rough estimate +/- what TurboTax calculated your gain/loss as)
   3. Press back, and enter in the number you calculated.  TurboTax should say that you hand no gain or loss with the sale of the asset.  
2. In the tax return with the "new" partnership, enter every item one by one into the new depreciation schedule.  
   1. Enter the "sale" date as the date that the new partnership started.  The date of every asset on the depreciation schedule will also be this same date.
   2. You'll need to make sure that you chose the same asset description for each asset, so that the depreciation convention / method is the same (ie Rental Real Estate Property | Residential Real Estate).  
   3. The software will ask if you had any prior year depreciation.  Click yes, and enter in the accumulated depreciation (far right column of the depreciation schedule) from the "old" partnership for that asset.  
3. Review the depreciation schedules from the old and new partnerships IN DETAIL, to make sure that the information looks like it transferred correctly.
   1. With this method, the depreciation that you've taken with the "old" partnership will transfer to the new partnership, and there will be no profit/loss to claim from the "sale" of the property.