Discussion:S-CORP CONVERTING PERSONAL PROP TO NEW S-CORP
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Discussion Forum Index --> Advanced Tax Questions --> S-CORP CONVERTING PERSONAL PROP TO NEW S-CORP
Discussion Forum Index --> Tax Questions --> S-CORP CONVERTING PERSONAL PROP TO NEW S-CORP
| 5 November 2009 | |
| I AM THINKING ABOUT CONVERTING MY SOLE PROPRIETORSHIP TO AN S-CORP. I JUST BOUGHT A NEW LAPTOP A MONTH AGO. IF I SETUP THE S-CORP AND DONATE THE LAPTOP TO THE S-CORP AND MY ADJUSTED BASIS IS $800 AND THE FMV IS $900 THAN MY CAPITAL ACCOUNT IS INCREASED BY $800. WHEN I USED THE LAPTOP IN THE SOLE PROPRIETORSHIP IT WAS 65% BUSINESS USE AND 35% PERSONAL USE. WHEN I DONATE THE ASSET TO THE S-CORP CAN I STILL USE 65/35 AND PUT THE BUS PERCENTAGE AS 65% ON 4562 FOR THE S-CORP? AND THEN IF I EVER SOLD IT IS THE BASIS USED GOING TO BE THE 65% AMOUNT OR THE 100% AMOUNT BECAUSE THE BUSINESS OWNS THE ASSET 100%.
THANKS! GTSEA09 | |
| 5 November 2009 | |
| Yes, you can still assign a business use percentage. When sold, compare your proceeds to the adjusted basis (so if fully depreciated business portion, would still have 35% of original cost as basis).
BTW, you will contribute (not donate). Your tax balance sheet would be DB Fixed Asset, CR Capital. | |
| 6 November 2009 | |
| Thank You Ardecker. I am learning a lot about S-corps as I have my recently got my EA and I appreciate you answering my question. I am going to be processing more and more S-corps in my business so I want to make sure I understand all the rules completely. | |
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