Accounting vs tax

[JG EA]

A client traded in a piece of equipment in 2006. On the books the new asset is listed at the amount of remaining cost in old + cash paid + liability. On taxes the old asset is being depreciated and the new asset will start being depreciated.

I usually add up the original cost of the assets and check against the total cost of assets on the depreciation form to see if they agree.

Will they agree in this case? Or will they disagree by the amount of the AD that was removed in determining the cost of the old asset?

[Joe Btfsplk]

It's not clear what you are saying

On a trade-in the correct tax treatment is to take the remaining undepreciated basis (cost minus depreciation) plus cash and amount of new asset financed.

You should not continue depreciating the old asset after the day it is traded in.

[S T]

Trade Ins

JG

I had such a hard time with this concept on a business vehicle, so I am sure yours is much more easy than mine.

At any rate I found the old thread http://www.thetaxbook.com/forums/sho...siness+vehicle

so maybe if you review you can apply to your t/p circumstances. (You are probably not asking about this part of the equation.

Do you have CFS Tax tools, as it will also furnish you with a trade in for LKE. You have to do the 8824,

Not sure as to your question about the adds and subtracts on your depreciation or asset listing, I can usually make them work both in the Tax Program and Quickbooks, once I do the preliminary numbers and journal entries.

Sandy

[JG EA]

Thanks

I'll check over the old thread, I'm probably confusing the issue.

It's not an auto.

And the reason I'm confusing the issue is I was leaving the old asset on the depreciation schedule and adjusting the new asset to account for the old and for the old depreciation.

It is easier just to make it the same as the books.

Then when I add up the full amount on the books for assets, it will equal the full amount on the depreciation schedule.

The ending remaining assets is the same in either case.

[Davc]

It's not an auto.

If the old asset was traded in on a like kind asset, it doesn't have to be an auto, the same rules & principles apply.