Im working on a homework problem using hr block software and cant figure out what to do with the following two entries.
1. auto loan interest 4800
2. Sold land to corp for 75000 paid 160000 5 yrs ago.
The main problem here is that I have the check figures for the problem and without these two entries the check figures are correct! I would appreciate some help! Thanks
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Hr Block Homework Problem Help!?3 comments to Hr Block Homework Problem Help!? |
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1. Unless the auto is used for business purposes, then the interest in non deductible,
2. Long tern Capital Loss ( 85,000 ) Schedule D
There is a maximum capital of ($3,000) for an individual per year until used up,.
Land is a non-depreciable asset,
Hope this helps
Auto loan interest: Not deductible unless it’s a business expense. And if only part of the use is for business, you must apportion between personal and business use based upon the number of personal miles and business miles driven.
Land sale: With a basis of $160,000 and a net proceeds of $75,000 you have a long-term capital loss. If you don’t have sufficient capital gains to use it up this year, you can only use $3,000 of it against other income this year and must carry forward the rest.
If your work is correct without these entries, you’ve screwed up somewhere else.
I am assuming that you are asking how to figure the property basis after 5 yrs.
New Property Basis= (Property cost – Land value) – Accumilated Depreciation
Straightline Depreciation =(cost of property – land value) / 27.5 yrs
160000 – 75000 = 85000
85000 / 27.5=3091 Annual Depreciation Cost
3091 X 5 = 15455 Accumilated Depreciation
85000 – 15455 = 69545 New Property Basis
I hope this answer you second part of the question.
Good luck!