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Docyak
Level 1

Recording Fixed assets when using a loan to purchase and planning a section 179 deduction

I have a side business running a personal training service in my home (that was set up as a S-Corp with one proprietor). Usually for my expenses I record the amount of the expense as cash and then offset it with a loan that I give myself. I am now buying some additional equipment (weight plates, barbells etc). How do I record this in quickbooks as an asset that was paid for with a loan for which I also want to take a section 179 deduction?

2 Comments 2
Rustler
Level 15

Recording Fixed assets when using a loan to purchase and planning a section 179 deduction

In the chart of accounts, create the new fixed asset type accounts for what you are buying, and an accumulated depreciation account for each. Also create an expense account called depreciation expense.

Create a loan liability account named for yourself.

Deposit the total amount being borrowed to the cash account and use the loan liability account as the source account for the deposit

Then use the cash account to buy the fixed assets, use the appropriate fixed asset account for each purchase and teh cost of the purchase

When tax time comes around, journal entries
debit depreciation expense and credit accumulated depreciation for each fixed asset.

Opinion: the loan still exists, and has to be paid back to the person loaning the money, there is no way around that. That is also true for past loans to yourself.

Docyak
Level 1

Recording Fixed assets when using a loan to purchase and planning a section 179 deduction

Not sure I follow. I have attached a screen shot of what I normally do when i purchase office supplies

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