Taxable Event?


J

Joe Lauton

Is this a taxable event?

Had a business 5-10 years ago - when it ended I simply
stored the scientific equipment since it could not be sold -
even as junk.

This last year I sold several batches at various prices from
$300 to $800.

The purchaser may send me a 1099 (to cover their behind in
some manner).

Can I just ignore this 'income' on my tax returns?

thanks

jl

Moderator:
Ignore it ONLY if you want to pay penalties and interest
in addition to the tax.

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B

Benjamin Yazersky CPA

Joe Lauton said:
Is this a taxable event?

Had a business 5-10 years ago - when it ended I simply
stored the scientific equipment since it could not be sold -
even as junk.

This last year I sold several batches at various prices from
$300 to $800.

The purchaser may send me a 1099 (to cover their behind in
some manner).

Can I just ignore this 'income' on my tax returns?
Moderator:
Ignore it ONLY if you want to pay penalties and interest
in addition to the tax.
To reiterate the comment of the moderator...
ignore it at your own risk

You have to address it.

___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] >>>
-----> real address on hobokeni or hobokenx <-----

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
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B

Bill

(e-mail address removed) (Joe=A0Lauton) posted:
Is this a taxable event?
Had a business 5-10 years ago - when it
ended I simply stored the scientific equipment
since it could not be sold - even as junk.
This last year I sold several batches at various
prices from $300 to $800.
The purchaser may send me a 1099 (to cover
their behind in some manner).
Can I just ignore this 'income' on my tax
returns?
Assuming this "business" you had was a sole proprietorship,
your ownership of the equipment could (IMHO) legitimately
include an extended cost basis.

Assuming you had records of the original cost of those
items, you could enter the 1099 data on a Schedule D --
itemizing as appropriate -- and show the actual cost basis
and pruchase date.

If, as is more likely, you no longer have records of the
actual purchase date and cost of the individual items, it
would be reasonable to show an approximate date of purchase
and at least estimate their cost basis as the current value
(or same as the amounts received) -- thus erasing any gain.

In the unlikely event any of these items actually increased
in value over your original cost, then you ought to report
the gain.

Bill

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
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H

Harlan Lunsford

Bill said:
(e-mail address removed) (Joe=A0Lauton) posted:
Assuming this "business" you had was a sole proprietorship,
your ownership of the equipment could (IMHO) legitimately
include an extended cost basis.

Assuming you had records of the original cost of those
items, you could enter the 1099 data on a Schedule D --
itemizing as appropriate -- and show the actual cost basis
and pruchase date.

If, as is more likely, you no longer have records of the
actual purchase date and cost of the individual items, it
would be reasonable to show an approximate date of purchase
and at least estimate their cost basis as the current value
(or same as the amounts received) -- thus erasing any gain.

In the unlikely event any of these items actually increased
in value over your original cost, then you ought to report
the gain.
it is of course possible that such basis exists. And that
basis would be the tax book value of said equipment or FMV,
whichever is lower. Of course if the section179 had been
used for that equipment, basis is naturally zero.

The only possible basis at this time however is zero, in the
absence of records. Result = taxable.

ChEAr$,
Harlan Lunsford, EA n LA

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
 
J

Joe Lauton

(e-mail address removed) (Joe=A0Lauton) posted:
Assuming this "business" you had was a sole proprietorship,
your ownership of the equipment could (IMHO) legitimately
include an extended cost basis.

Assuming you had records of the original cost of those
items, you could enter the 1099 data on a Schedule D --
itemizing as appropriate -- and show the actual cost basis
and pruchase date.

If, as is more likely, you no longer have records of the
actual purchase date and cost of the individual items, it
would be reasonable to show an approximate date of purchase
and at least estimate their cost basis as the current value
(or same as the amounts received) -- thus erasing any gain.

In the unlikely event any of these items actually increased
in value over your original cost, then you ought to report
the gain.
Are you proposing that I write this off a second time? It
was generally expensed in the year purchased - many years
ago. I would feel better about assessing storage costs
since the business ended.

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
 
S

Seth

Joe Lauton said:
Is this a taxable event?
Yes. Money changed hands.
Had a business 5-10 years ago - when it ended I simply
stored the scientific equipment since it could not be sold -
even as junk.
Did the equipment have a cost basis at that time? Did you
write it off (for tax purposes)?
This last year I sold several batches at various prices from
$300 to $800.

The purchaser may send me a 1099 (to cover their behind in
some manner).

Can I just ignore this 'income' on my tax returns?
The IRS won't.

Seth

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
 
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M

Mark Bole

Joe Lauton wrote:
[...]
Are you proposing that I write this off a second time? It
was generally expensed in the year purchased - many years
ago. I would feel better about assessing storage costs
since the business ended.
No, do not "write this off" twice. When you ended the business, you
disposed of assets by selling them, converting them to personal use,
junking them, or some similar process. At that time, you may have been
required to recapture previously deducted accelerated depreciation
expenses that you turned out to be ineligible for, for example listed
property business use falling below a certain percentage prior to full
depreciable life.

If you junked the assets, the basis is zero, and any gain from re-sale
is taxable income, as has already been noted.

If your business ended, then storage costs of (worthless?) non-business
property are a personal expense and not deductible.

-Mark Bole
 
S

Seth

Mark Bole said:
If your business ended, then storage costs of (worthless?) non-business
property are a personal expense and not deductible.
However, they might be allowed to be added to the basis of that property.

Seth
 
H

Harlan Lunsford

Seth said:
However, they might be allowed to be added to the basis of that property.
Good thing you said "might be", for those storage costs are also
personal in nature and therefore not to be capitalized.

ChEAr$,
Harlan
 
S

Seth

Good thing you said "might be", for those storage costs are also
personal in nature and therefore not to be capitalized.
What was his purpose in holding on to the property and paying storage
costs? If it was in hope of a later sale, that seems like a business
to me.

Seth
 
H

Harlan Lunsford

Seth said:
What was his purpose in holding on to the property and paying storage
costs? If it was in hope of a later sale, that seems like a business
to me.
Don't really matter as to his intent, or purpose.

ChEAr$,
Harlan
 
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J

Joe Lauton

Don't really matter as to his intent, or purpose.

ChEAr$,
Harlan
I do not doubt (perhaps others do) the validity and your correct
interpretation of the IRS rules as written - however ridicules they
may be.

Suppose that my business discarded old property (I was best informed
as to time and place) and I was lucky to sell these 'found' items at a
garage sale.
Would this also be a taxable event? Are incomes from ALL garage sales
taxable <grin>?
 
H

Harlan Lunsford

Joe said:
I do not doubt (perhaps others do) the validity and your correct
interpretation of the IRS rules as written - however ridicules they
may be.

Suppose that my business discarded old property (I was best informed
as to time and place) and I was lucky to sell these 'found' items at a
garage sale.
Would this also be a taxable event? Are incomes from ALL garage sales
taxable <grin>?
Before answering your question, need to know what form your business
takes: proprietorship, partnership, corporation (C or S)? LLC? other?
Also what is the tax basis of those assets?

ChEAr$,
Harlan Lunsford, EA n LA
 
J

Joe Lauton

Before answering your question, need to know what form your business
takes: proprietorship, partnership, corporation (C or S)? LLC? other?
Also what is the tax basis of those assets?

ChEAr$,
Harlan Lunsford, EA n LA
Sole proprietor, calendar year, cash basis - went out of bus.

Now what about ye olde garage sales?
 
H

Harlan Lunsford

Joe said:
Sole proprietor, calendar year, cash basis - went out of bus.

Now what about ye olde garage sales?
But still, what about the tax basis of the assets? If it's zero, then
yes, income from a garage sale.
And by the way, you can't say your business discarded assets when you
yourself as proprietor were the business legally.

ChEAr$,
Harlan Lunsford, EA n LA
 
M

mike

But still, what about the tax basis of the assets? If it's zero, then
yes, income from a garage sale.
And by the way, you can't say your business discarded assets when you
yourself as proprietor were the business legally.

ChEAr$,
Harlan Lunsford, EA n LA
Exactly what do you mean by Tax Basis?

Some was fully expensed or written off.
What if some was not?
 
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H

Harlan Lunsford

Exactly what do you mean by Tax Basis?
Basis is cost minus accumulated depreciation, iow, all the tax
depreciation that was ever taken, including section 179.
Some was fully expensed or written off.
all proceeds taxable.
What if some was not?
Then it's up to you to be able to prove the tax basis as outlined above.
However, as a practical matter, if you have no records whatsoever, IRS
would consider it all taxable.

Moral of the story; never throw away tax returns and supporting
documents for business.

ChEAr$,
Harlan Lunsford, EA n LA
 

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