Cancel a Long-Term Liability Account

The exact calculations are not that easy. Most likely your tax professional will do it after the end of the year. If you want to get the liability off, my suggestion would be to do it through some Owner's Draw or similar account. Make a journal entry debiting the liability and crediting the Owner's Draw account.

I hope I could help.

Reka

You should contact your tax preparer for the correct entry. There are many factors that need to be considered to make the proper entry. You should never apply it to Owners draw as this can have a negative tax consequence if not recorded properly later on.

Marc Barnes

To learn more about Copper Canyon Tax, please visit out website.

If the old vehicle was indeed a business vehicle then it would have been listed as a fixed asset as well as having a loan against it. To remove the vehicle and associated accounts you would debit the loan for the loan balance, debit the accumulated depreciation account for the associated depreciation taken, credit the fixed asset account for the acquisition cost of the vehicle, and debit or credit and Other Income Account - Gain/ Loss on disposition. This will remove the asset and associated loan and depreciation from your balance sheet and hold the results in an account that will bring the transaction to the attention of your tax preparer.

Thanks everyone for all your help!!!