A C-corp changed to become a S-corp in 2008. How do you report the depreciation expenses of the assets which have been being depreciated by the C-corp. For example, a computer's original cost is $1,000 and has been depreciated by the C-corp for two years and now the remaining basis is $700. How do you depreciate this asset in the S-corp?
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The only thing I am sure of
is that you have two returns to do. The C Corp Short Year Return was due on the fifteenth day of the third month following conversion and the S Corp Short Year Return will be due on the normal date for the Corporation's Returns.
I do not know how depreciation is handled in these situations. -
A guess
Way off the top of my head, since the entity already exists and owns equipment as a corporation and is now electing to be taxed as a pass-through S, I would think that the depreciation schedules continue. But, just because I think that's logical, I realize that it's not necessarily the law and would have to research if I get such a situation. I guessed that the depreciation continues because of the BIG that attaches to appreciated assets; you don't deem to sell them and start all over, they continue but with that old C trait attached until sale or ten years.Comment
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