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financeguru2
financeguru2, Financial Planner
Category: Financial Software
Satisfied Customers: 136
Experience:  Several years of experience in working with various financial software packages
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Im completing a 2011 tax return for my client. In 2010 he

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I'm completing a 2011 tax return for my client. In 2010 he dissolved one S-corp and started another. All of the assets were transferred to the new S-corp. I have access to the depreciation schedule (paper). How do I go about carrying old assets (most of them 70% depreciated) in the new corporation on Form 4562 using Intuit ProSeries? Do I record new basis as old cost -(minus) old accumulated depreciation? What about remaining life? I have only 2 years left on most of the assets. Do I have to start the depreciation from the beginning, for 7 yr.? (5 and 15yr. in some other cases)

financeguru2 :

To answer your question, the basis for the new assets will be the fair market value of the assets under IRC Section 301. This is also the amount of the distribution on the old corporation. It is fairly common to mark the fair value of the assets at their adjusted tax basis when distributed, although fair market value should technically be determined independently. Therefore, once distributed, the assets should be recorded at their fair value and depreciation lives will start over. As a result, you would not record any accumulated depreciation, since the asset's life starts over once contributed to the new corporation. You may be able to write off the assets under Section 179 if taxable income exists.

I want to make sure I have answered your question, so please feel free to respond if anything is unclear prior to rating the answer. If I have successfully answered your question, please rate the answer only at that time. Thank you.

Customer:

Thank you. Then, what about the old company. The IRS was not notified about the prior company having been dissolved.

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