There Is No Option to Convert Business Asset to Personal Use?

[mgmorris]

We are an LLC and I am trying to convert a business vehicle to personal use.  The problem is that there is not an option to select "converted to personal use" OR "special handling required."  I selected "disposed of by some other means" and there is not a screen that pops up asking if special handling is required.  Now the problem with this is that it ends up showing up as a Loss to Net Income in the amount of the remaining basis plus the depreciation for a half year.

My Assets and Liabilities DO balance, but my Net Income in Turbo Tax differs from what I have in our books.  Should I just code the distribution in my books as a loss or is there a better way?

[Carl]

A business asset listed/claimed on a 1065 return can't be converted. It has to be either sold, given away, or distributed to one or more members as a distribution, or a return of capital if it was initially a member contribution to the partnership/multi-member LLC.

[mgmorris]

@Carl 

So if it is distributed to one of the partners, then it is supposed to be a loss to the business? 

[PatriciaV]

No. The distribution of property to a partner does not result in a gain or loss to the partnership.

To avoid this when you enter the disposition under Income >> Dispose of Business Property, report it as a sale for the exact amount of the adjusted basis of the vehicle (purchase price less accumulated depreciation). This will result in zero income on the return.