S-Corp Vehicle Depreciation

[littleman]

I am assisting a client who formed a single shareholder S-Corp as of 01/01/06. Previous to his plumbing business being an S-Corp, it was structured as a sole propreitorship filed on Schedule C of 1040 for nearly 20 years.

He had a van that was put into service in 2002 while the business was still a sole propreitorship that he was depreciating utilizing MACRS 5 year. When listing assets for the corporate 1120S return, do I use the date placed in service from the schedule C or do I list the date placed in service as 01/01/06 to coincide with the beginning of the S-Corp?

Thanks!

[OldJack]

Use the date placed in service from the schedule C.

Anti-churning rules prevent taxpayers from manipulating the placed in service date in order to come under more favorable depreciation rules. Also, property received by a corporation under code §351 (tax-free exchanged for stock) results in the recipient computing basis in the property received as "steps into the shoes" of the transferor [Quickfinder Depreciation Handbook page 1-7].