Small Business Owner questions - assets & shareholder basis

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Small Business Owner questions - assets & shareholder basis

Post by Petra » Mon Feb 12, 2018 9:17 am

I have a small Scorp and my accountant has asked me to update an equipment list (based on what I still own). I see from the accountant's depreciation & amortization report that all equipment has been depreciated over the years.
Why is it important to keep track of what assets I still have (from an accounting standpoint)? And should I include things on the list that I technically still have but that has become so obsolete as to become junk (ready to dispose of for no $)?
In the same vein, what is a shareholder basis worksheet used for?
I'm trying to get a sense of how to use my time wisely, as well as look to the future when I might want to transfer my share of ownership or dissolve the SCorp altogether. TIA!

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Re: Small Business Owner questions - assets & shareholder basis

Post by clemrick » Mon Feb 12, 2018 10:21 am

First, you should have asked your accountant these questions, then they could answer you with actual details. But since you asked, you need to keep track of equipment because they are assets and are included on your balance sheet. The accountant need to know what you have and what you have gotten rid of because there might be capital losses or gains that must be dealt with.

Also, if you do try to sell your business, the buyer will want to know what assets they are buying. If you don't have an up-to-date list of assets and depreciation, good buyers will pass you by.

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Re: Small Business Owner questions - assets & shareholder basis

Post by solobuildingblogs » Tue Feb 13, 2018 10:13 pm

This is important because if you ever need to sell your business, you won't be giving away your depreciated assets with basis of zero for free. Surely they are worth something. Having a list will expedite this. And when you sell the assets, you might be taxed on depreciation recapture on form 479. Best to use the table on page 21 of form 4562.

It might be depreciated over the years, but it may not be depreciated to zero. So you need to know the basis.

Details are in this post about section 179 vs MACRS: ... -practice/

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