Business Use converted

[S T]

Schedule C T/P just sent me her 2005 information. In Dec 2004 a new laptop computer and some other computer equipment $3447 was placed in service and $58 of depreciation (SL) was taken in 2004, she was a computer consultant. No Sect 179

Her life took a drastic change in 2005 and she decideded to no longer to perform computer consulting, so she advises she just shut the business down. No income and relative few expenses, (no deductions taken) except I have this computer equipment.

She still has the laptop computer and computer equipment , so it was converted to personal use.

She also has her vehicle that in the past appears that she used about 25% for business use, utilized standard mileage rate.

Other older items on her depreciation schedule are obsolete and abandoned or no longer in service. They produce a minimal loss so I am okay in doing those items. TB 9-21

My question is how to treat the 12/04 computer equipment and then do I have to do anything with the auto depreciation component of the standard mileage? She is still driving the vehicle and no deduction for 2005

I know I am suppose to recognize this answer, but I am just drawing a "blank". I can't find the reference, but my thoughts are no depreciation and no gain/loss reporting until such time as she disposes of the computer equipment and vehicle. Then we are to calculate the business use gain/loss upon the disposition. Like the taxpayer is going to remember prior depreciation and basis adjustment , and if I am still preparing her taxes, I am also suppose to remember or have a note in file about prior depreciation and basis adjustment. This seems very odd to me. Is there a way to report on the 2005 tax return and be done with it, and if so, how do I report gain/loss. Transfer to personal, can I just take the basis adjustment after depreciation and use as a sales price on the 4797 and show no/gain no/loss? At least for the computer equipment.

Not sure what to do with the vehicle.

Thanks,

Sandy

[JG EA]

Schedule C T/P just sent me her 2005 information. In Dec 2004 a new laptop computer and some other computer equipment $3447 was placed in service and $58 of depreciation (SL) was taken in 2004, she was a computer consultant. No Sect 179

Her life took a drastic change in 2005 and she decideded to no longer to perform computer consulting, so she advises she just shut the business down. No income and relative few expenses, (no deductions taken) except I have this computer equipment.

She still has the laptop computer and computer equipment , so it was converted to personal use.

She also has her vehicle that in the past appears that she used about 25% for business use, utilized standard mileage rate.

Other older items on her depreciation schedule are obsolete and abandoned or no longer in service. They produce a minimal loss so I am okay in doing those items. TB 9-21

My question is how to treat the 12/04 computer equipment and then do I have to do anything with the auto depreciation component of the standard mileage? She is still driving the vehicle and no deduction for 2005

I know I am suppose to recognize this answer, but I am just drawing a "blank". I can't find the reference, but my thoughts are no depreciation and no gain/loss reporting until such time as she disposes of the computer equipment and vehicle. Then we are to calculate the business use gain/loss upon the disposition. Like the taxpayer is going to remember prior depreciation and basis adjustment , and if I am still preparing her taxes, I am also suppose to remember or have a note in file about prior depreciation and basis adjustment. This seems very odd to me. Is there a way to report on the 2005 tax return and be done with it, and if so, how do I report gain/loss. Transfer to personal, can I just take the basis adjustment after depreciation and use as a sales price on the 4797 and show no/gain no/loss? At least for the computer equipment.

Not sure what to do with the vehicle.

Thanks,

Sandy

Computers are listed property See Veritas at

http://www.thetaxbook.com/forums/showthread.php?t=6177

That will answer about the computers.

About the car - if you want to put something on a permanent record showing the new basis in the car how about a Non Depreciable asset listing on a depreciation sheet with the return. You could say:
Basis of "... auto"

[DonPriebe]

Numbers don't make sense unless ...

Schedule C T/P just sent me her 2005 information. In Dec 2004 a new laptop computer and some other computer equipment $3447 was placed in service and $58 of depreciation (SL) was taken in 2004, she was a computer consultant. No Sect 179

Something is missing here. If she bought a computer in December (assuming nothing else was purchased during the year) she would use the mid-quarter convention. Computers are 5 year property, both for regular MACRS and ADS. You say "(SL)", so we assume ADS. Depreciation should be 2.5% of basis, or $86. She only claimed $58 so perhaps the business use was only 67%.

If this were the case, (i.e. she was properly using ADS), there is nothing to reclaim when the business use falls to zero.