Gail in Virginia Posted July 29, 2010 Report Share Posted July 29, 2010 I have a client who has cancellation of debt income for their S-Corporation. They have depreciable assets that still have basis left, so I would like to reduce their basis in those tax attributes to eliminate the cancellation of debt income from their reportable income. How do I show this on ATX? I would like to keep the assets listed so that if and when they are sold I know that the basis is zero. Quote Link to comment Share on other sites More sharing options...
Maribeth Posted July 29, 2010 Report Share Posted July 29, 2010 I have a client who has cancellation of debt income for their S-Corporation. They have depreciable assets that still have basis left, so I would like to reduce their basis in those tax attributes to eliminate the cancellation of debt income from their reportable income. How do I show this on ATX? I would like to keep the assets listed so that if and when they are sold I know that the basis is zero. Increase your accumulated depreciation to show that the basis is zero. This adjustment is done as of the first of the year in which the cancellation of debt occured. Maribeth Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted July 30, 2010 Report Share Posted July 30, 2010 I think the basis reduction takes place on the first day of the year after the cancellation takes place. In other words, you depreciate as you normally would in the year of the cancellation, and then reduce the basis for the following year. Tom Lodi, CA Quote Link to comment Share on other sites More sharing options...
jainen Posted August 1, 2010 Report Share Posted August 1, 2010 >>Increase your accumulated depreciation.... reduce the basis for the following year<< Maribeth and Bulldog Tom, you offer markedly different solutions. Would either of you care to cite a reference in support of your procedure? Quote Link to comment Share on other sites More sharing options...
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