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Posted by crm0922 on April 1, 2008, 7:24 am
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Hello all. Time for a last minute question:
In late 2006 I closed a business that I had run for 3 years.
When I first formed the business, I elected to deduct a portion of the
business equipment under Section 179. I also MACR's deducted
equipment during the 3 operating years of the business.
The business was forced to close for various reasons, but essentially
it was out of my control. The landlord was horrible and the building
was barely useable, the person I was splitting the rent with decided
to up and leave for no reason, and numerous potential replacement
tenants flaked out.
Thus, I decided to close the business in Sep 2006 and a few months
into 2007, my wife convinced me to move across the country.
Upon closing the business, I moved all of the primary equipment into
storage. I only sold one $300 item and I already recovered that as
income on my 2006 taxes.
None of the equipment has been converted to personal use in any way,
shape, or form and has not been touched since I moved the equipment to
storage in my current home city. The storage space is dedicated
solely to the storage of this equipment.
At some point, I intend to try to reform the business in some way, and
I have no intention of selling any of the equipment.
So my question is this:
What do I do on my 2007 taxes with regard to the MACR's depreciated
stuff? Is there something that needs to be done regarding the Sec
179'd stuff?
Since I hope to restart the business, are these indeed "idle business
assets" that can be put back into service at a later date? Do I need
to indicate that to the IRS somehow?
Do I need to do a Schedule C since I've had no income from this
business in 2007? Is the business technically "closed" if I intend to
start it up again at some future date?
I'd really like to do the right thing here, but there is no way I can
afford to recapture my prior deductions even if I was somehow able to
resell the equipment. And I have no intention to use any of this
stuff as "personal use", and that wouldn't make much sense anyway.
Any help or tips would be greatly appreciated.
Thanks,
Chris
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