Client didn't list some machinery for the farm. (I don't know why, just forgot?) He sold at an auction, and I have to figure gain or loss. Do I have to figure deprec allowable, or can I use as personal property, no loss if applicable. He probably used the machinery around his house, as he did not live on his farm, just had acres in the country. Any suggestions?
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He ran cows, baled hay, fed the cows. He also had a business in town. I don't know why he didn't tell me when he purchased machinery. I guess he didn't need the deduction at the time. What is the deal about allowed or allowable? Will I have to do ordinary income on these assets even though he didn't get the tax benefit from them?Comment
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Forgotten depreciation
Maybe he didn't tell you that he purchased the equipment because he paid cash and he didn't want you to ask where the cash came from.
If he has been filing a Schedule F and reporting farm income and expenses, I would file a 3115, claim the missed depreciation on Schedule F, then report the sale on the 4797.
If he purchased the equipment in the "open" tax years, I would amend those years, claim a refund, and then report the sale in 2007.Jiggers, EAComment
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He's getting ready to draw SS, and amending back and taking more expenses would decrease that. Can I just run as a personal item? Report the income, the cost and if a gain, pay- if a loss no deduction?Comment
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Nope
A farm, like a schedule c business, has income and expenses and IRS requires reporting
of both.
Especially for EIC purposes, and SSA would have the same high standard I'm sure.ChEAr$,
Harlan Lunsford, EA n LAComment
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