Depreciation recovery on QB 2000

Quickbooks has no facility to account for disposing of assets. You have to post journal entries that look like the following:

Debit: Cash (amount received from the sale) $600 Debit: Loss on the sale (difference between book value and sale price) $0 or Credit: Gain on the sale $600

Debit: Accumulated Depreciation (to clear the balance) $3500 Credit: Fixed Asset (Cost of the item sold) $3500

These last 2 lines basically reverse the accumulated depreciation and the asset cost off of your books

You should be showing the fees to Ebay and PayPal as costs:

Business Machine (Fixed Asset): Credit $3,500.00 Accum. Dep'n. (Fixed Asset): Debit $???.?? Business fees etc. (Expense): Ebay/PayPal fees - Debit $??.?? Gain/Loss on Disposal of Assets (Other Income): This would be the balance remaining - debit would be a "Gain" and a credit would be a "Loss".

Cat

Laura wrote:

Yes, I forgot to account for them. Sorry about that.

The amount of Accum depreciation will equal the fixed asset amount because it was fully depreciated per the original message ($3,500).

I believe you have it backwards. The normal balance for Gains account is a credit balance because this is treated as income and the normal balance for a Loss account is a Debit because this is treated like an expense. So in this case it is a gain (other income) since it was sold for more than the book value ($0) at the time of the sale.

So if the eBay/Paypal fees were $10.00 then the JE looks like this:

Business Machine (Fixed Asset): Credit $3,500.00 Accum. Dep'n. (Fixed Asset): Debit $3,500 Business fees etc. (Expense): Debit Ebay/PayPal fees $10.00 Cash (Bank): Debit $600.00 (net cash received) Gain on Disposal of Assets (Other Income): Credit $610.00

OK thanks. I've done the general journal transaction on Quickbooks to wipe reverse depreciation and wipe out the asset. And one to the bank and "other income" to recogize the funds.

Pehaps you can advise how to handle it on the tax return. In the past I've only had assets that were mine personally (Schedule C business) and the couple times I've done a recovery it was just on the personal return. This time it's on my S-Corp of which I am sole owner.

I *think*...

The net income on the 1120S should be without the $600 (approx) recovery and this gets reported to the stockholder down at the corner of the K-1.

And the way I read it S-Corp is supposed to give me the stockholder a note stating that this item was purchased on this date for $3500, fully depreciated via Sect.179 that year, was sold this date in 2006 for $600.

I believe I read that the S-Corp does not submit the Form 4797. I suppose the stockholder (me) does? And that flows through to the 1040?

(I know someone's going to say I should have an accountant for this but that would seem a shame just for one $600 transaction. I did hire an accountant help me the first year and subsequently have been able to just plug in the new numbers. One thing that keeps it simple is that when I started the business I decided to keep the physical assets that I purchased from a precedessor as my own property which I as a Schedule C business rent to the S-Corp. I shoulda done this one item that way too...it would have kept things simpler! Anyway, it's a service business so without physical assets or product inventory it's been simple enough to do myself.)