Taxable Event?

Is this a taxable event?

Had a business 5-10 years ago - when it ended I simply stored the scientific equipment since it could not be sold - even as junk. This last year I sold several batches at various prices from $300 to $800. The purchaser may send me a 1099 (to cover their behind in some manner). Can I just ignore this 'income' on my tax returns?

thanks

jl

Moderator: Ignore it ONLY if you want to pay penalties and interest in addition to the tax.

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Reply to
Joe Lauton
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To reiterate the comment of the moderator... ignore it at your own risk You have to address it. ___________________________________

-----> real address on hobokeni or hobokenx

Reply to
Benjamin Yazersky CPA
Reply to
Harlan Lunsford

Yes. Money changed hands.

Did the equipment have a cost basis at that time? Did you write it off (for tax purposes)?

The IRS won't.

Seth

Reply to
Seth

Joe Lauton wrote: [...]

No, do not "write this off" twice. When you ended the business, you disposed of assets by selling them, converting them to personal use, junking them, or some similar process. At that time, you may have been required to recapture previously deducted accelerated depreciation expenses that you turned out to be ineligible for, for example listed property business use falling below a certain percentage prior to full depreciable life.

If you junked the assets, the basis is zero, and any gain from re-sale is taxable income, as has already been noted.

If your business ended, then storage costs of (worthless?) non-business property are a personal expense and not deductible.

-Mark Bole

Reply to
Mark Bole

However, they might be allowed to be added to the basis of that property.

Seth

Reply to
Seth

Good thing you said "might be", for those storage costs are also personal in nature and therefore not to be capitalized.

ChEAr$, Harlan

Reply to
Harlan Lunsford

What was his purpose in holding on to the property and paying storage costs? If it was in hope of a later sale, that seems like a business to me.

Seth

Reply to
Seth

Don't really matter as to his intent, or purpose.

ChEAr$, Harlan

Reply to
Harlan Lunsford

I do not doubt (perhaps others do) the validity and your correct interpretation of the IRS rules as written - however ridicules they may be.

Suppose that my business discarded old property (I was best informed as to time and place) and I was lucky to sell these 'found' items at a garage sale. Would this also be a taxable event? Are incomes from ALL garage sales taxable ?

Reply to
Joe Lauton

Before answering your question, need to know what form your business takes: proprietorship, partnership, corporation (C or S)? LLC? other? Also what is the tax basis of those assets?

ChEAr$, Harlan Lunsford, EA n LA

Reply to
Harlan Lunsford

Sole proprietor, calendar year, cash basis - went out of bus.

Now what about ye olde garage sales?

Reply to
Joe Lauton

But still, what about the tax basis of the assets? If it's zero, then yes, income from a garage sale. And by the way, you can't say your business discarded assets when you yourself as proprietor were the business legally.

ChEAr$, Harlan Lunsford, EA n LA

Reply to
Harlan Lunsford

Exactly what do you mean by Tax Basis?

Some was fully expensed or written off. What if some was not?

Reply to
mike

Basis is cost minus accumulated depreciation, iow, all the tax depreciation that was ever taken, including section 179.

all proceeds taxable.

Then it's up to you to be able to prove the tax basis as outlined above. However, as a practical matter, if you have no records whatsoever, IRS would consider it all taxable.

Moral of the story; never throw away tax returns and supporting documents for business.

ChEAr$, Harlan Lunsford, EA n LA

Reply to
Harlan Lunsford

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