So I'm going to assume that you do "in fact" have some business assets on the SCH C listed in the Busienss Assets section of the program. The fact you may have taken the SEC179 deduction and/or Special Depreciation Allowance that allowed you to fully depreciate any asset in the first year of business really doesn't matter. It's list a listed asset that must be account for in this transition. We'll start by dealing with the single member LLC reported on SCH C first.
Basically, you are going to report the LLC as "closed, sold or otherwise disposed of" on your personal 1040 tax return. You will report all business income received by the LLC and business expenses paid by the LLC the same as you have in the past, up to the time of "closing" this LLC. The date of the closing "must" be at least one day before you "opened" the S-Corp. The S-Corp is considered to be open on the date your S-Corp registration with the state says its "active". It's important that the close date of the LLC and the open date of the S_Corp not be the same, and they definitely can't overlap.
So start working through the business and select the option for "I closed, sold or otherwise disposed of this business in 2018" and then keep working things through "as if" you still have that business open. Work through the business income section, then the business expenses section.
Next for the Business Assets, you'll work through each asset one at a time and when prompted select YES on the screen that asks if you "stopped using this asset in 2018." After clicking YES, one or two screens later you'll be presented a screen asking "Special Handling Required?" You must select YES on that screen. If you select NO then you will be prompted for sales information on that asset. You're not selling the asset. You're transferring it to your single owner S-Corp. So basically what you will be doing is removing the asset from the business for personal use. (Later, you will add the asset to the S-Corp as a capital contribution.)
Finally, work through the Business Vehicle Expenses section and show that vehicle as removed for personal use.
Then complete working through your business in it's entirety. Once done, you will need to print out a hard copy of the IRS Form 4562 for all business assets. There will be two 4562's and they both print in landscape format. One is titled "Depreciation and Amortization Report" and is the really important one. The other is titled "Alternative Minimum Tax Depreciation" and you "might" need it for the S-Corp return later. So you print it just in case you do need it.
At this point, you can go ahead and finish working through the rest of your personal return if you like. Just be aware that you can not file it until "AFTER" you have completed and filed the S-Corp return. The S-Corp will be issuing you a K-1 for your RMD as well as a W-2 if you are also an employee of that S-Corp (which you can be.) You'll need those documents in order to "complete" your personal tax return.
Next, you'll fire up TurboTax Business 2018 and start your very first S-Corp return. The capital contributions of the assets removed from the LLC for "personal use" will be your personal capital contributions. These contributions can NOT happen on the same date they were removed from the LLC or before that date. They can be before the S-Corp was officially opened, printed it's after the date the LLC was closed. But the contributed asset will not be "in service" until the opening date of the S-Corp at the earliest.
I'm not sure, but I think that since the vehicle is not 100% business use, you can not add it as a vehicle asset to the business. But you can check me on that as you work through that section of the 1065.
Understand that the IRS does not consider your LLC as "sold, closed or otherwise disposed of until all of the following criteria are met.
- Your EOY inventory must be zero.
- All assets must be shown as sold, removed for personal use, stolen, lost to casualty, etc.
- Any vehicles in the business must be shown as removed from the business either through the sale of that vehicle, removal for personal use, theft, casualty loss, given away as a gift, etc.
If all the above is not true, then the IRS will be expecting a SCH C on your 2019 return. If they are expecting one and don't get it, then it's generally 24-36 months later when the "catch it" and send you a nasty gram. You want to avoid that the best you can.
