All Things Tax

All Things Tax

Like the title says, from the filing process and tax questions to tax policy and reform, you can search and share All Things Tax here. This is the place to find answers to all your general questions that don't fall under the other categories. And just a reminder: questions about software or online filing should be posted in DIY Products.

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Pioneer
Posts: 1
Registered: ‎01-12-2017
Accepted Solution

Sold Business Assets

I claimed the full amount for Section 179 Deduction last year.  I sold that equipment to fund this year's purchase.  So, I have two questions regarding that situation.  First, do I have to do anything regarding last year's deduction?  Second, where/how do I claim selling that equipment as "income" on this year's return?

Associate (Pioneer)
Posts: 61
Registered: ‎03-22-2016

Re: Sold Business Assets

Dear Lance:

 

If you purchased equipment that is similar in kind and purpose as that which you sold, and the sale and purchase was related, then what you have is known as a "like-kind exchange."  Such exchanges may be non-taxable, or partially taxable, depending on whether unlike property (e.g. cash) was involved.

 

The good news is that in a non-taxable like-kind exchange, you won't have to repay the Section 179 deduction.  However, it will have a significant impact on the basis of the new equipment.  You'd probably will have to complete form 8824 for this transaction.  I recommend that you visit a tax professional to help with the tax aspects of this transaction.

 

Hope the foregoing is helpful.

 

SimonT

(Tax Preparer)

Highlighted
Tax Pro
Posts: 1,436
Registered: ‎09-04-2014

Re: Sold Business Assets

Welcome to our forum:

If you sold the property and then used the proceeds to purchase new property, you do not have a like kind exchange. 

You will need to report the sale in part IV of form 4797 ( recapture of 179 deduction.) The difference between the 179 deduction and what the depreciation would have been had you not used the 179 deduction needs to be recaptured and will then be reported as other income on your business return.

Hope this helps

BettyB
Sr. Tax Analyst
Pioneer
Posts: 1
Registered: ‎03-26-2014

Re: Sold Business Assets

I had the same problem. H&R Block should have put a link in to make this much easier.