Question

Selling business assests

Forum|Forum|3 years ago
January 31, 2023
1 reply
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Sold semi truck and trailer last year for just under purchased price. Both units fully depreciated and kept for full life cycle (3.5yrs on truck, 6yrs on trailer). I know this treated as regular income. Is there any way to offset this amount?

Not A Product Question

SharonD007

No, there is no way to offset the recapture of depreciation for your business assets (semi-truck and trailer). When you sell business property, your gain or loss is determined by calculating the difference between the amount you receive, and the assets adjusted basis (which is the original cost minus any depreciation and expensing deduction claimed).

For further information on the disposition of business assets please review the TurboTax article Managing Assets.

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K

kevinH1Author

Original cost minus any depreciation and"expensing deduction claimed". What qualifies as expensing deduction?

D

DianeW777

Your truck and trailer had a recovery period/useful life. You indicated you had them for that full recovery period. Essentially the adjusted basis (cost) for tax purposes is zero at this point because you expensed and claimed as a depreciation deduction the full cost of them over their useful life.

The gain will not be offset by any adjustment once they assets are sold. In your situation the full amount you received for the truck and trailer is taxable as ordinary income (the amount of the gain up to the point of depreciation expense used for these assets). If you had sold them for more than what you paid for them, you would have had capital gain on the difference. As you can imagine that's very unlikely with this type of asset.

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