User talk:Mbaqb

From TaxAlmanac

Correct liabilities assumed reduce the amount of the gift. The wife can join in the gift, really nothing necessary except for her agreemnt.

My comments are:

Sale price of Truck 34,485 (amount of loan assumed) Depn recapture 24,XXX ( This is a Section 1245 asset so all the depreciation gets recaptured.)

Gain in Excess of basis (34,485 -24,xxx) approx 10,000k

My software might treat the excess gain as capital gains. I don't know what your software will do. Also, and basis reduction via Section 1017 is subject to recapture therefore the entire is of the sale is depreciation recapture.

Part IV 4797

I had this recollection that on a sale where 179 was taken, you recalculated and reflected the excess of 179 over allowable depreciation as a recapture, tnen made the gain on the sale smaller since you restored the basis, but I can find no verification of that in instructions or anywhere else, and when I read the instructions, it notes that Part IV is only used when usage drops.

But my memory may be pulling tricks on me.

Great work:

These are all "change in use" 179(d)(10) (10) RECAPTURE IN CERTAIN CASES The Secretary shall, by regulations, provide for recapturing the benefit under any deduction allowable under subsection (a) with respect to any property which is not used predominantly in a trade or business at any time.

(f) DISPOSITIONS AND OTHER TRANSFERS OF SECTION 179 PROPERTY.-- (1) IN GENERAL. Upon a sale or other disposition of section 179 property, or a transfer of section 179 property in a transaction in which gain or loss is not recognized in whole or in part (including transfers at death), immediately before the transfer the adjusted basis of the section 179 property is increased by the amount of any outstanding carryover of disallowed deduction with respect to the property. This carryover of disallowed deduction is not available as a deduction to the transferor or the transferee of the section 179 property.

(2) RECAPTURE UNDER SECTION 179(d)(10). Under Section 1.179-1(e), if a taxpayer's section 179 property is subject to recapture under section 179(d)(10), the taxpayer must recapture the benefit derived from expensing the property. Upon recapture, any outstanding carryover of disallowed deduction with respect to the property is no longer available for expensing. In determining the amount subject to recapture under section 179(d)(10) and Section 1.179-1(e), any outstanding carryover of disallowed deduction with respect to that property is not treated as an amount expensed under section 179.

This part applies to 1245(a) dispositions

(3) BASIS; APPLICATION WITH SECTION 1245. The basis of property with respect to which there is recapture under paragraph (e)(1) of this section shall be increased immediately before the event resulting in such recapture by the amount recaptured. If section 1245(a) applies to a disposition of property, there is no recapture under paragraph (e)(1) of this section.

Code Sec. 1245. Gain from dispositions of certain depreciable property

(a) GENERAL RULE (1) ORDINARY INCOME Except as otherwise provided in this section, if section 1245 property is disposed of the amount by which the lower of -- (A) the recomputed basis of the property, or (B) -- (i) in the case of a sale, exchange, or involuntary conversion, the amount realized, or (ii) in the case of any other disposition, the fair market value of such property, exceeds the adjusted basis of such property shall be treated as ordinary income. Such gain shall be recognized notwithstanding any other provision of this subtitle.

What all this says, I think, is that I was incorrect before. Section 179 recapture only applies when there is a change in the business percentage use. Your research has found the correct solution. Good work.

Fired the Client

Good for you. I think you did the right thing.

Now that 80% of your aggravation is gone what are you going to do for excitement?

Roy

Amend 2006

Well, I would only amend the return if the risk of loss relative to the truck passed to someone. Maybe, title to truck can help. Whose name was/is on the title? Who carried insurance on the truck?

Otherwise, I would treat it as the payments as maybe rental income, or, as a loan from the son to the father, if the father reimburses the son for the payments from the proceeds of the truck. Maybe, a gift from son to father?

Business use

I would not be concerned about a decrease in business use.

1. It is a dump truck. 2. Being for sale should be considered a business use. 3. Son using truck should still be a business use.

Most of the activites are not personal.

Say the father stop all business activity, except for winding up the affairs of the business. That winding up the affairs activity is still a business activity. Trying to dispose of business assets is still a business activity.

The use by the son is either an attempt to dispose of the asset to the son, or, maybe an attempt to avoid some losses (that is make the loss smaller), both of which would be a business activity.

Best Regards

Roy