CCH Axcess Tax

Depreciation Entries for Assets Sold or Traded

When depreciable property is sold, enter the month and day of the sale in the "Date Sold" field of the asset on the Depreciation and Amortization worksheet, General section. Depreciation is computed for the current year for non-ACRS assets to the date of sale. In addition, the recapture of any investment credit required is computed if the "ITC Code" field has been coded for the allowance of investment credit. The asset will be removed from Pro Forma for the following year.

If depreciable property is traded on a new asset in a tax-free exchange so that the remaining basis is included in the cost of the new asset, then specific entries are required depending on various factors.

For the old asset, the date of the trade should be entered as the date sold. Recapture of Investment Credit will be calculated when required if you coded the "ITC Code" field for the computation of Investment Credit. The asset will be removed from Pro Forma for the following year.

Up to six new assets will be created, up to five continuation assets for each asset sold and an additional asset if gain was recognized or boot was given in the exchange. The continuation assets will be created with the same acquisition date, depreciation method, life, and accumulated depreciation as was entered for the sold asset. If more than five assets are exchanged, the additional assets will not be automatically created so additional entries will be required. A like-kind number will then be automatically entered for the sold asset and the new asset that was created.

If gain is recognized on the exchange or boot given, an additional asset will be created. The date sold entered for the old asset is used as the boot asset's acquisition date. The sold asset's method and life are used for the boot asset, and the cost of the asset is the amount of boot given in the exchange or the amount of gain recognized exceeds the boot received.

If election 1.168(i)-6{T} is made, only one asset will be created and the cost is the remaining basis of all continuation assets exchanged and the boot.

All of these assets can be viewed on the Depreciation and Amortization worksheet, General section by going into Options/Reset input.

If the entire basis is not eligible for Investment Credit, you cannot use the "Automatic ITC" feature, but must enter the credit separately on Investment Credit section. Do not enter an "N" in the "ITC Code" field.