How do I handle business property that is becoming personal property when my business closes?

[mav577]

First off, thank you for taking the time to read this question.

When I started my business a few years ago, I changed some property from personal use to business use (a laptop, a new motherboard for my laptop after it broke, and an AC adapter for my laptop after it broke) and claimed CCA on the business portion of this property (since I used it both in my business and for personal use) each year of my business until last year when I closed my business.

I actually have two questions.

1. Should I have actually just expensed the business portion of these items since they all had a low FMV (each with a value of less than $350)?

2. From my understanding, when I close my business this property is deemed to be sold back to me. Is this correct? If so, how do I determine the amount that I bought it back from myself? And how do I record this on the T2125 (in Area D, I know, but do I also have to record the amount I bought it back from myself as business income or record it anywhere else)? Also, does the fact that I only claimed the business portion each year of this property affect how I record/calculate any values related to the disposition of the property?

Is it likely that I would have to record income or a capital gain for my situation for this property?

Thank you for taking the time to read and reply to my question. I realize that property I'm dealing with is of a trivial value but I want to know how to handle this correctly for the future.

Cheers.

[TurboTaxTerry · Accepted solution]

You will have a deemed disposition of the asset as a sale back yourself. Use the CCA section of the T2125 to record the Disposition Proceeds for an amount that would realistically be considered the Fair Market Value (FMV) at the time of change in use. If there is a value you may be able to determine this comparing similar items for sale on websites.

If you have been prorating your CCA because of shared personal/business use you can use the same formula.

The software will then calculate a Recapture - Proceeds greater than the UCC. Or a Terminal Loss - Proceeds less than the UCC. Either of these amounts should transfer to the T2125.

[TurboTaxTerry]

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