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Sale of Rail Car

LAMullen
Level 1

I have a client that sold railcars originally purchased in 1981/1982. I know the original cost. I do not know how much depreciation was taken, although I'm assuming it was equal to the original cost. We have been using the Schedule E for all rental income/expenses with a Property Type of 8. When I try to add the asset on the Asset Entry Worksheet, I'm having trouble finding the correct type of asset to choose. I believe the depreciation would have been 20 years, so it's completely depreciated. However, if I choose G - General purpose tools/machinery/equip, it's picking Asset Class 5, prescribed ACRS with a recovery period of 5 years. Is this okay? My feeling is that the gain is simply the sales price less sales expenses.

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1 Comment 1
TaxGuyBill
Level 15

As you said, if it is fully depreciated, it won't really matter.

However, I'm wondering why you are reporting it on Schedule E, which is for renting real estate.  A business of renting out other items generally belong on Schedule C.