I have a personal vehicle that I am giving to my business. What transaction would you use. Journal Entry? Then, once it is transferred to the business would you set it up under fixed assets.
Hi PJ111,
The answer depends on the entity of the business. Yes, the vehicle is a Fixed Asset. the other Account to use in the journal entry would be an Equity type.
Laura Kaniuk - LJK Bookkeeping Services
The entity is a sole prop. So when I enter it as a fixed asset (vehicle asset) do I show the price it cost new or what the vehicle is worth? When I make a journal entry I show it as owner's equity? I am also confused on how to depreciate a vehicle. I have not had much accounting but have worked with quickbooks pro for 4 years, however, never had a vehicle to depreciate. I have set up, in my chart of accounts Vehicle Assets with two sub accounts of Accum Depre. - Vehicle and Vehicle purchases. Do I need to go to the IRS wedsite and use their technique for depreciation? Thanks for your help.
From a tax standpoint, why would you take a personal vehicle and transfer it to the company? You transfer the vehicle at market value and then you depreciate it. I would make sure you analyze the difference between standard mileage vs. depreciation and actual cost before I would transfer it.
If you make the election to transfer the asset, you depreciate over 5 years with either straight line or MACRS depreciation.
Marc
"......You can no longer drive the vehicle for personal use or it becomes taxable income to you."
This statement is not correct for a sole proprietorship.
"...The vehicle may qualify for Sec 179 depreciation."
This statement is not correct for a 'contributed asset' Section 179 is only available in the year an asset (new or used) is purchased . (I am assuming that the vehicle was owned prior to the start of the business - the OP needs to verify that assumption)
