To contribute or sell equipment from one company to another.

[DebitThatCreditThis]

I have a client that owns 2 companies (Company A and Company B).

He received 3 AC units in lieu of compensation for consulting services under Company A (valued at $30,000).

He wants to install those 3 units at Company B.

He thinks he should sell the units from Company A to Company B. I think he should just contribute them as property (idk if sales tax would be an issue if he were to sell them).

Questions: - What's the proper way to go about this? He was also concerned about "getting his money back" from the initial consulting transaction. I think contributing to Co B and taking a distribution of cash of $30K is just fine.


- For the Co A consulting transaction, is the JE as simple as:
AC Unit $30,000
Consulting Income $30,000

[Uncle Sam]

Why not make intercompany transactions?

Company A:
After recording your J/E, make another one recording the transfer
DR Intercompany with Co B $ 30,000
CR AC Unit $ 30,000

Company B:
DR AC Unit $ 30,000
CR Intercompany with Co A $ 30,000

Depreciation is then taken on Company B as it will be the user.
Sales tax is definitely a consideration and likewise should be either borne by A or journalized into B.

[DebitThatCreditThis]

Why not make intercompany transactions?

Company A:
After recording your J/E, make another one recording the transfer
DR Intercompany with Co B $ 30,000
CR AC Unit $ 30,000

Company B:
DR AC Unit $ 30,000
CR Intercompany with Co A $ 30,000

Depreciation is then taken on Company B as it will be the user.
Sales tax is definitely a consideration and likewise should be either borne by A or journalized into B.

I like the intercompany transaction route, thanks!

[Beersheba]

Are these two companies "related taxpayers" according to the definition? If so, there are things he can do, and things he cannot. (Without getting into a more involved conversation)