Hello,

In preparing my 2008 return I think I may have made a large error in filing my 2007 tax return. It seems as though rather than list each asset that was purchased in 2007 individually I lumped everything together in one equipment category that contained all of the same type of equipment. For the life of me I can't figure out why I would have done that. Now I had to sell a few assets in 2008 and there is no way for me to refer to the individual asset since I didn't list them individually in 2007. I'm assuming that I'm going to need to amend my 2007 return to provide individual asset details (the actual expenses will match) but I claimed a section 179 deduction on all of the equipment so I'm not really sure what to do at this point.

Thanks,
GG

Actually, I would not worry about lumping the assets together as most large corporations tend to do that, as long as you maintain a detail asset listing. So, there is no reason to amend the prior year 2007 tax return.

Now, that you have sold some of the assets clearly you would have some gain or loss on those assets. I would identify the asset sold and deduct that amount from the lump sum of the assets and separately compute the gain or loss on Form 4797.

I am assuming you are going to consult a CPA or a tax professional to help you to determine the depreciation recapture. Also, do not forget the favorable treatment of losses from sale of business assets, they are treated as ordinary losses.

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