Solved: Sole Proprietor purchased asset and incorporated in the same year.

Donna1 · ‎12-06-2019

I have a client that was an sole proprietor for January through September 2017. October 1, they incorporated as an S-Corp. February 2017 they bought a new vehicle. How do you take depreciation on the vehicle in the sole proprietorship in Pro Series? If I record the asset purchase date and then the date of incorporation, it makes the depreciation disappear because you obviously do not take depreciation on an asset that is acquired and disposed in the same year. Anyone have the situation happen to them and can provide some guidance?

rbynaker · ‎12-06-2019

Was the vehicle retitled in the name of the S Corp? I'll assume not. In which case, I would probably just use standard mileage rate. Then have the S Corp reimburse at SMR for 10/1 - 12/31/17 to catch up and for 2018+.

If the vehicle was contributed to the S Corp and retitled then you'll probably need to override depreciation and manually split the year between Sch C and the 1120S.

Rick

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rbynaker · ‎12-06-2019

Was the vehicle retitled in the name of the S Corp? I'll assume not. In which case, I would probably just use standard mileage rate. Then have the S Corp reimburse at SMR for 10/1 - 12/31/17 to catch up and for 2018+.

If the vehicle was contributed to the S Corp and retitled then you'll probably need to override depreciation and manually split the year between Sch C and the 1120S.

Rick

Sole Proprietor purchased asset and incorporated in the same year.

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