relinquished business asset

[snowshoe]

I have a client who has a fishing boat that we have listed as an asset on a schedule C.  After  2 years, the boat was repossessed/relinquished for inability to pay for it.  TP states that the entire amount was still owed.  TP had taken depreciation for the 2 years. No 1099C was received.  How do I enter this in Proseries?  I had hoped it could all be done on the disposition section- but that doesn't look right to me.  Thank you in advance for your help!!

[taxiowa · Accepted solution]

If there was nothing paid on religuishment to bank, then whatever loan balance remained is the sale price.  That was benefit gained on disposal.  Basis is as on asset worksheet with depreciation already figured in.  Just enter as sale.

[snowshoe]

Thank you.  This is great news.  It just seems to easy  😉  Just wanted to make sure that I was reporting correctly.

[TaxGuyBill]

I agree with taxiowa *IF* the bank has accepted the foreclosure as full payment of the loan.

However, it is possible they have not, and the taxpayer still owes the bank some money.  You would need to find out if that is the case, and if so, what the amounts are.