[tgwadez11]

So I’ve got a situation where a client keeps their fixed assets on the book basis and obviously the tax return will be tax basis. They distributed 4 pieces of equipment throughout the year to the owners. I’m going to have a book to tax difference on depreciation, but my question is, is it possible to have a book to tax difference for the distribution amount too? I’m confused.

So say for simplicity sake, they have a cost basis of $10,000, book accum. depreciation on those assets of $6,000 and tax accum. depreciation on the assets of $8,000…using book depreciation, I’d have a $4,000 distribution, but tax I’d have a $2,000…right? Entries:

Book – Cr Equip for $10,000, debit accum depr for $6,000 and distribution for the remaining $4,000

Tax – Cr Equip for $10,000, debit accum depr for $8,000 and distribution for the remaining $6,000

So, is a book to tax difference on a distribution possible? Non-deductible expense? Or am I missing something? Thanks

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