General asset accounts

[Bucky]

When you sell an item being depreciated in a GAA I know it has a basis of zero and treated as ordinary income but if the enity is a sch C does the gain get added to income and self employment or does it just end up as ordinary income on 4797!

[Gene V]

I have the same question, except the asset my client wants to sell has been fully depreciated over 10 years ago.
I believe if the business use drops below 50%, then you reports the recapture amounts in part IV of form 4797 and then to the form were the asset was originally taken.

However, when you sell the asset, does it still fall under the 50% rule?

[outwest]

The citation is...

1402(a) (3)

(With reference to SE tax)

there shall be excluded any gain or loss--

(A) which is considered as gain or loss from the sale or
exchange of a capital asset,

>>
Ran across it the other day and just dying to use in casual conversation.

[Gene V]

Thanks outwest, that is just what I needed.

[Bucky]

Not sure that covers my question about GAA treatment. Thanks anyway.

[Bees Knees]

Not sure that covers my question about GAA treatment. Thanks anyway.

I think it does. Section 1402(a)(3) says gain on the disposition of an asset is not subject to SE tax.

When you dispose of one asset that is included in a GAA, it is still the disposition of an asset, even though basis is treated as zero. Thus, the sale is reported on Form 4797 just like any other asset sale with gain flowing directly to the 1040, thus by-passing Schedule C and Schedule SE.

[Bucky]

Thanks. I treated it that way that past few years so at one time I knew that. I think my brain is full or maybe i just need to refrag it.