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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28081
Experience:  Taxes, Immigration, Labor Relations
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I have a single member LLC business. I have some testing equipment

Customer Question

I have a single member LLC business. I have some testing equipment that I own personally, and want to devote it to use inside my business (and depreciate it). The only basis I have for the value of the assets I want to bring into the business are current FMV (I do not have any purchase receipts, or the like). Can this equipment be brought in to the business and simply depreciated/expensed, or is it considered income as well?
Submitted: 6 months ago.
Category: Tax
Expert:  Lev replied 6 months ago.
That woudl not be considered income.But for depreciation purposes you woudl need to establish a basis.Depreciation is an income tax deduction that allows a taxpayer to recover the cost or other basis of certain property.Depreciation begins when a taxpayer places property in service for use in a trade or business or for the production of income.If that is your personal property - and you converted it for business use - see page 10 for depreciation. The basis for depreciation is the lesser of the following amounts.The FMV of the property on the date of the change, orYour adjusted basis on the date of the change..That woudl be your depreciation basis.
Customer: replied 6 months ago.
So what your saying (in my case) is, that I can take the piece of personally owned test gear, find the current FMV of the unit to use as my basis on the date the unit was put into the business, and that is my number for depreciation. and at that point the equipment is now "part of the business"?
Expert:  Lev replied 6 months ago.
That is correct assuming that its FMV is less than what your adjusted basis on that asset (mainly your purchase price).As you will place the asset in service for use in your business operations - you may start depreciating that asset.
Customer: replied 6 months ago.
Understood. But if I don't have record of the purchase price, would the list price be acceptable as the adjusted base? Because I know that the FMV will undoubtedly be less than that.
Expert:  Lev replied 6 months ago.
Generally that rare raises any issues...
Expert:  Lev replied 6 months ago.
As that is very reasonable - I would say - you are OK.But legally you do need to have the actual receipt..I appreciate if you take a moment to rate the answer.Experts are ONLY credited when answers are rated positively.If you still have any doubts, need clarification - please be sure to ask.I am here to help you with all tax related issues.