I have a small business--partnership. I bought a truck for 1k in March. I sold the truck for a gain. How should I treat this gain in the tax books and in the financial statements? Of course I was going to take a Sec 179 deduction but I sold the asset and not sure how to handle the small amount of gain. Thanks for any help.
2006-11-27 08:54:12 · 4 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
It was bought by the partnership (2 members).
2006-11-27 13:07:56 · update #1
For taxes, use form 4797. It will be taxed as ordinary income (not a capital gain since it was held less than one year). You won't be able to take section 179 (or any other depreciation) on this asset since it was held for less than one year.
As for the finanicals, I would recommend gain on sale of assets or some other type of miscellaneous income category.
2006-11-27 12:30:06 · answer #1 · answered by Chad B 2 · 0⤊ 0⤋
Hey,
I would treat it on the Financial statement as "Other Income". As far as a tax standpoint, it depends on the way it was purchased. If it was contributed to the partnership by you, then it will be taxed differently then if you bought it through the partnerships money's. If you bought it through the partnerships money's (or you are the only person in the partnership, it does happen), then it is considered a short-term capital gain, which I believe is taxed as ordinary income.
2006-11-27 17:09:17 · answer #2 · answered by drp2505 2 · 0⤊ 1⤋
David P: Any time there is a change in who the partners are, legally the partnership is dissolved and a new one is formed. If only one partner remains, the 'new partnership' is technically not a partnership. The company is now a sole proprietorship. I now these is of absolutely no help the the original asker.
2006-11-27 18:22:13 · answer #3 · answered by STEVEN F 7 · 0⤊ 0⤋
Use federal form 4797; sales of business property.
2006-11-27 17:48:38 · answer #4 · answered by acmeraven 7 · 0⤊ 0⤋