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I sold a large asset in 2016 that we had depreciated.

Original cost basis: $95,000 (purchase...
I sold a large asset in 2016 that we had depreciated. Original cost basis: $95,000 (purchase price) Depreciated basis: approx $12,000 Price I sold it for: $78,000. So I have a depreciation recapture of approx. $66,000. BUT, I had to pay off a loan of about $98,000 after the sale, so I realized a loss of about $20,000. Question: Is that $20,000 consider an expense of the sale? It seems that I should be able to include that loss somewhere.
JA: The Accountant will know how to help. Is there anything else the Accountant should be aware of?
Customer: The original loan on the item (an RV used in business) was for $105,000 because it included some money to do improvements. We used $95K as the original basis. But that is why the payoff is greater than the original basis
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Answered in 13 minutes by:
4/18/2017
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,298
Experience: Taxes, Immigration, Labor Relations
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When you took out a loan - it was not included into your income - correct?
Thus when you pay it back - you may not deduct that payment.

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In this case you will include into your taxable income $66,000.
You are correct - that is because of depreciation recapture rules.

On the other hand - you already deducted depreciation - so we may not deduct it again.
Sorry if you expected differently.

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,298
Experience: Taxes, Immigration, Labor Relations
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