1. Home
  2. General Accounting
  3. gain / loss on sale of asset vs. cap gains ??

gain / loss on sale of asset vs. cap gains ??

a corp that has been in business for 30 years sells off one of its showrooms in another state, including inventrry, buildings and land. we booked the huge gain (from the land and bld sale) to the income statement account "gain / loss on sale of assets", creating a big, taxable "corp income" at the bottom line. can we char the sale instead as "capital gains" at a lower tax rate vs. regular corp income? what about the machinery and equipment, of course most of it was fully depreciated, thus causing a large "gain on sale of assets"..??

thanx !!

WOULDN'T THE INCOME FROM THE SALE OF THE REAL ESTATE TO BRAD AND JODY BE SUBJECT TO CAPITAL GAIN TAXES RATHER THAN ORDINARY INCOME? BY THE SAME TOKEN, OUR SALE OF DEPRECIATED SHOP EQUIPMENT AND VEHICLES TO MIDWEST WOULD ALSO BE SUBJECT TO CAPITAL GAIN TAX RATHER THAN ORDINARY INCOME. THE SALE OF THE INVENTORY TO MIDWEST WAS AT DEALER PRICE WHICH MATCHED OUR COST ON THE EXISTING HARSH INVENTORY, WHICH MEANS WE SOLD IT FOR OUR REPORTED VALUE WHEN IT WAS IN THE NAME OF HARSH, THEREFORE WE HAVE NO GAIN.

Reply to
~^ beancounter ~^
Loading thread data ...

a corp that has been in business for 30 years sells off one of its showrooms in another state, including inventory, buildings and land. they booked the huge gain (from the land and building sale) to the income statement account "gain / loss on sale of assets", creating a big, taxable "corp income" at the bottom line.

could they char the sale instead as "capital gain" (long term) at a much lower tax rate vs. regular corp income?

what about the machinery and equipment, of course most of it was fully depreciated, thus causing another large "gain on sale of assets"..??

thanx !!

Reply to
~^ beancounter ~^

"~^ beancounter ~^" wrote

Corporate gains like this are taxed at regular corporate tax rates.

In other words, there is not any lower capital gains rate for the corporation.

Of course, "S" corporations pass those gains through to their shareholders, who would report them on their returns.

Reply to
Paul Thomas, CPA

Paul...thanx for the response....so...C corps do not have the benefit or option that individuals get...in order to have long term and short term capital gains taxed at different rates?

all gains & losses (due to asset sales) get "washed" through the income statement under the account "gain / loss on sale of assets"... thus having a direct effect on the taxable income?

Reply to
~^ beancounter ~^

"~^ beancounter ~^" wrote

Nope. Gains or losses flow to the front of the return like all other revenues.

Yup.

Reply to
Paul Thomas

thanx Paul.....

Reply to
~^ beancounter ~^

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.