theft

[bylerandersoncon]

I had a business asset that was fully depreciated through Section 179 accelerated depreciation in 2019. It was stolen last year and we received an insurance distribution. Turbo tax is calculating a negative amount in the "Dispose of Business Property" section on the Income Tab. Can someone explain this?

For context, I did not import from Quickbooks, but the way we accounted for this was to debit the loan on the assett (liability) and Credit the gain/loss (other income) on the asset.  I did import last year's TurboTax file where the asset is fully depreciated.

Since the asset was fully depreciated, should this not be a gain?  It looks like an offset to income. 

[Critter-3]

The amount you got from the insurance payment is what you sold the stolen property for ... so if you indicate the property was sold then the form 4797 should fill in properly. 

[Mike9241]

you didn't tell us what happen with the loan on the asset.  was that paid off by the insurance?

for example 1) FMV 1800 loan $1000 you receive $800 because the insurance company pays off the loan

you have an $1800 gain since the asset is fully depreciated. 

bookkeeping entries 

cash debit 800

asset credit xxxxx

accumulated depreciation debit xxxxx

loan debit 1000

gain credit 1800

******************** 

example 2) FMV 1800 loan $1000 you receive $1800 because the insurance company did not pay off the loan that's your obligation

cash debit 1800

asset credit xxxxx

accumulated depreciation debit xxxxx

gain credit 1800

when you pay off the loan

cash credit 1000

loan debit  1000

************************

as you can see the loan has no effect on the gain

**********************************************

now if for some reason the loan isn't required to be paid off either by the insurance company or yours then you have an additional $1000 of income from the forgiveness of debt.

[AmeliesUncle]

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@bylerandersoncon wrote:

I had a business asset that was fully depreciated through Section 179

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Is this a Partnership or a S-Corporation?

The disposition of assets that had Section 179 don't directly show up on the entity return.  The information should end up on the K-1 and the actual sale numbers should show up on the 1040.

Those summary screens on TurboTax can be weird and deceiving at times, so I suspect it is just showing something weird because of the special rules for Section 179.

[bylerandersoncon]

We file as an S-Corp