Discussion:ABANDONMENT OF BUSINESS ASSET

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Discussion Forum Index --> Advanced Tax Questions --> ABANDONMENT OF BUSINESS ASSET


Discussion Forum Index --> Tax Questions --> ABANDONMENT OF BUSINESS ASSET

Theresa d (talk|edits) said:

29 March 2014
Taxpayer has abandoned business asset. I think it gets reported on form 4797 but I'm not sure where. any input appreciated.

Kevinh5 (talk|edits) said:

29 March 2014
it depends on whether it was inventory or other ordinary income asset, a business use asset, or a capital asset. 'business asset' doesn't tell us enough.

Theresa d (talk|edits) said:

29 March 2014
It was a section 197 intangible (mailing list). Business was a schedule C which is no longer in operation

Kevinh5 (talk|edits) said:

29 March 2014
4797 is correct. But ALL of the intangibles purchased had better be worthless, you don't get to pick and choose which ones to write off early. If any purchased intangibles are not worthless, you don't get to write off any at all yet.

Theresa d (talk|edits) said:

29 March 2014
They are all worthless. Does it show in part I of form 4797 and I just put zero in for sales price?

Kevinh5 (talk|edits) said:

29 March 2014
yes

Theresa d (talk|edits) said:

29 March 2014
thanks

Ckenefick (talk|edits) said:

29 March 2014
Why not Part II of Form 4797? Part I is for sales and exchanges.

MWPXYZ (talk|edits) said:

29 March 2014
There is a good chance it will get to part II eventually.

Nilodop (talk|edits) said:

29 March 2014
Part II is the right answer, even though it, too, has a column for Date Sold and a column for Gross Sale Price. Line 10 is where the instructions say. Part IV might come into play, too. As the very last instruction says, "Be sure to increase your basis in the property by the recapture amount."

Ckenefick (talk|edits) said:

29 March 2014
Yeah...subject to a 5-year recapture rule.

Ckenefick (talk|edits) said:

29 March 2014
My last comment was directed at Part I treatment. You put it in Part I, your software will treat it as a 1231 loss...and will treat it as a 1231 loss carryforward subject to recapture (as ordinary income) if you have 1231 gains in the next 5-years. Not a good, or proper, result.

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