How to take personal property like cameras and make it a fixed asset of my S-Corp.

danslearning · ‎December 30, 2022

Ok so I have a couple of cameras. One I have owned for years and one was purchased in November of 2022. I would like to make both of these items fixed assets of my business. I understand I can sell them to myself. But what are the implications by doing this? Am I still going to be paying taxes on the income to myself now? Can, I import the cost of the item into owners equity and then make it a fixed asset, instead of paying myself for it? If I do it this way is it still depreciable?

Rainflurry · ‎December 31, 2022

@danslearning

Contributing property to your business is no different than contributing cash. As you mentioned, you will record them as fixed assets and a corresponding amount to your equity account. This contribution is not considered income. The cameras need to be valued at fair market value (FMV), not your original cost, so you should have some documentation to support the values. When you determine the FMV, create journal entries: debit the fixed asset accounts and credit your owner's capital equity account (if a sole proprietorship). Yes, you can depreciate them. You have a couple of depreciation options so that should be discussed with your CPA/tax accountant.

@Pete_Mc You need to have purchased the cameras through the business and quite honestly, pending the cost, your tax folks may have written it off in the first year had you purchased it through the company. A business owner can contribute personal property to their business. It does not need to be purchased through the business. Whether it's $5K in cash or $5K in cameras contributed to the business, they both increase the owner's/shareholder's basis

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Pete_Mc · ‎December 30, 2022

This is really a question for you CPA/Tax Accountant. No one here really knows your business and can say for sure.

My gut tells me it isn't going to fly. You need to have purchased the cameras through the business and quite honestly, pending the cost, your tax folks may have written it off in the first year had you purchased it through the company. What are the cameras worth if you tried to sell them now? That's all they are worth to the company if there is a way to transfer them over.

danslearning · ‎December 30, 2022

Well what I am suggesting technially is paying myswlf. Its allowed for other thing why not this? To me it would make no sense to force me to pay myself then have me stick the money back into my business when I simoly can just keep it there like I deposited the cash back in. I honestly wouldnt expect you to know this question. I have searched for this for days before asking it. I was hoping to get a response from an someone that is an accountant like some of the other on here. But thank you for your suggestions

Rainflurry · ‎December 31, 2022

@danslearning

Contributing property to your business is no different than contributing cash. As you mentioned, you will record them as fixed assets and a corresponding amount to your equity account. This contribution is not considered income. The cameras need to be valued at fair market value (FMV), not your original cost, so you should have some documentation to support the values. When you determine the FMV, create journal entries: debit the fixed asset accounts and credit your owner's capital equity account (if a sole proprietorship). Yes, you can depreciate them. You have a couple of depreciation options so that should be discussed with your CPA/tax accountant.

@Pete_Mc You need to have purchased the cameras through the business and quite honestly, pending the cost, your tax folks may have written it off in the first year had you purchased it through the company. A business owner can contribute personal property to their business. It does not need to be purchased through the business. Whether it's $5K in cash or $5K in cameras contributed to the business, they both increase the owner's/shareholder's basis

Pete_Mc · ‎December 31, 2022

Very true, thanks for the catch... I was not thinking of it as a contribution last night, more along the lines of just trying to get a potential tax write off when it wasn't purchased through the company.

FritzF · ‎January 09, 2023

Hello again, Rainflurry.

I appreciate you for always sharing your knowledge about QuickBooks. This will definitely help other users as well in the future. Please keep on posting here in the Community.

Keep safe and have a great rest of the day.

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How to take personal property like cameras and make it a fixed asset of my S-Corp.