Asset previously depreciated in a different business

[larrygroves]

I own a couple pieces of machinery (bulldozer and backhoe-loader). I originally purchased them (used, not new) for a start-up business; I depreciated them there (sect. 179). Later I closed the business.

The machines served in personal use for a couple years. In 2024, I began another business where I will now use them.

My question: How do I treat these assets in the new business? Can I bring them over from personal use at market value, or is that not legit since they were previously depreciated fully in my prior business?

Thanks in advance for your thoughts.

Larry G

[ThomasM125 · Accepted solution]

You will enter them as assets in the new business at the lower of fair market value or your cost basis in them (cost less the depreciation allowable on them.) The Section 179 depreciation should have been recaptured as income in the year you disposed of the business, so the cost basis would be the purchase price less normal depreciation allowable.

[larrygroves]

Excellent advice. Thank you!

LG