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Mark D
Mark D, Enrolled Agent
Category: Tax
Satisfied Customers: 1304
Experience:  MBA, EA, Specializing in Business and Individual Tax Returns and Issues
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I have a client with an s corp, this company owns 10 van to

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I have a client with an s corp, this company owns 10 van to transport clients , the same owner also has another company that is an 1065. She tranfer the vehicle title to the 1065 company i am assuming at the same price because they are the same owner at the end of the day, basically she transfer the vans to the other company, how do i get the asset out of the s corp which accounts do i use , and how do i get the asset in on 1065 which accounts do i use.

Hello, it would depend if the S-Corp sold the assets to the 1065 entity, or if she distributed the vans to herself and them contributed them to the 1065. Which happened?

Customer: replied 1 year ago.

she changed all the titles to the 1065 basically. the tittle was never under her name at any point.

Ideally, the 1065 would pay the S-Corp FMV for the vans. The 1065 would then use that purchase price as the cost basis to depreciate and the 1120-S would report the sale on Form 4797. You could book a payable and receivable until the transaction is paid. If no consideration is given, since to a related party, the distribution would still be recorded as sold at FMV, but it may convolute the cost basis to the 1065. This is why I would prefer the former.

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