Hello,
I hope someone can please help me. I have a small janitorial business run out of my home that ceased operating at the end of 2020, and I am trying to file the final tax return. However, there are some things I am not sure how to correctly enter into TurboTax. I would greatly appreciate any guidance. This is my first time submitting to a message board, so I hope I do it correctly. Thank you very much
Some quick facts about the business:
- The business has been running at a loss for many years and subsisting on shareholder loans to make up the deficit, none of which were ever able to be re-paid.
- There are only two shareholders: myself and my wife.
- All debts have been paid, so there are no liabilities.
- There is $0 cash left in the accounts, and there are no other assets of which to speak.
- The business was setup with 1,000 common stocks at $1 each and additional paid-in capital of $39,422.
- The business has no inventory, and all of its equipment fully depreciated long, long ago. The equipment, including a 2000 Ford F-150 truck, is all still present at the house, but I will be getting rid of it soon with the exception of the truck, either by placing it on the curb or taking it to the dump as it is all really old. I would like to transfer the truck for personal use. As a note, the $8,000 Truck was never entered into TurboTax as it was already fully depreciated by the time I started using TurboTax (the accountant at the time fully depreciated it in the year it was purchased).
What confuses me is how the Balance Sheet should appear and how to account for the equipment? In my readings, it has said that any remaining property after all debts are settled could be given to the shareholders in exchange for their shares.
I understand that the Total Assets and Liability should each be $0, but I don't know what to do for
- Depreciable Assets: currently both it and less depreciation are = $17,190 which never included the truck,
- Capital Stock: currently = $1,000, and
- Additional Paid-in-Capital: currently = $39,422.
The Retained Earnings is of course a negative number offsetting the ever increasing Loans from Shareholders.
1. Should the $1,000 Capital Stock shares = $0 when the business is closed?
2. Should the Depreciable Assets (and less depreciation) rows both = $0?
3. Should I add the 2000 F-150 Truck into the TurboTax Disposed Asset list with its date of purchase and price and then designate that it had been fully depreciated via a Schedule 179 in its first year? What about the next question on full State Depreciation? When I try this, the Balance Sheet depreciation rows are neither cancelling each other out nor equaling $0.
4. I did read that one could transfer property to a shareholder in TurboTax by selecting Sold and entering $0. Should this be done for all equipment that hasn't yet been disposed of? When I do this, the Depreciation rows in the Balance Sheet again start getting strange values that don't cancel out.
Also, as a side note, I never understood whether or not a janitorial service business would qualify as a QBI. Should it?
I realize this might be a long, convoluted question, but I appreciate any help you might be able to provide.
The janitorial business would qualify:
For purposes of this subsection, the term “qualified trade or business” means any trade or business other than
A) any trade or business involving the performance of services in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, or any trade or business where the principal asset of such trade or business is the reputation or skill of 1 or more of its employees,
.