Like-kind exchange post 01/02/00 Property Type P, R

Process for a like-kind exchange for assets using Property Type P or R in Sage Fixed Assets.

Note: The Disposal method of Like-kind exchange doesn’t apply to Personal Property Types P, A, T, and Q after 12/31/2017; instead use the Disposal Method of Taxable Exchange for these assets which once otherwise qualified as a 1031 exchange.

In Sage Fixed Assets:

1. Run depreciation on the asset to the month before the Like-Kind Exchange disposal date.
2. Make a duplicate of the asset. You'll use this duplicate, the Replacement asset, for Tax depreciation to continue.
   
   Use the Replicate function to replicate the asset one time. The calculated depreciation carries into the new asset.
   1. From the Asset Detail view, Click Asset, Replicate.
   2. In Replicate this asset 0 times: Enter 1, Click OK.
3. Dispose of the original asset as a Like Kind Exchange Post 1/2/00. In the Disposal tab:
   1. Enter the Disposal Date, Select Disposal Method: Like-Kind Exchange Post 1/02/2000.
   2. Enter the Fair Market Value into Non-Cash Proceeds. This is the value or the trade in amount given as credit toward the new asset.
      • NOTE: The Recognize Gain/Loss will be set to No for all books by default.
      • NOTE: For all Tax related books: The Current Year Depreciation will be backed out.
4. Modify the Replacement asset:
   1. Verify the Current Thru date on the asset is the month prior to the Disposal Date. Ensure the Current YTD and Current Accum reflect the amount of depreciation as of that date.
   2. Optional: Print Detail for the Main page to have a record of the original amounts.
   3. In all TAX related books only (TAX, STATE, AMT & ACE books): 
      Note: If fields below are greyed out, enable them via File, Edit Company, Book Defaults tab
      • Copy the Current Thru date to Beginning Date
      • Copy the Current YTD to Beginning YTD
      • Copy the Current Accumulated to Beginning Accumulated
   4. If Boot was paid, then in the Internal Book:
      • Change the Acquisition Value to zero.
        • Important: For the Critical Depreciation Change: Answer Yes, Select Placed-in-Service date when prompted. This prevents the current depreciation information appearing in the Beginning fields.
      • Change the Depreciation Method to NO.
   5. Put the dot in Exchange or Conversion. (This prevents a double recording of the asset if earlier reports are generated) .
   6. Save the asset.
   7. Optional: Comment in the Notes tab to identify the asset as the replacement asset of a Like-Kind-Exchange.
5. Creating a new asset:
   1. Use the new Placed in Service date as the date that the new asset is actually Placed in Service.
   2. In Tax related books: Enter into the Acquisition Value as the Boot (additional money) that was paid.
   3. In the Internal book:
      • If Boot was paid: Enter the sum of the Boot plus the Non-Cash proceeds
      • If no Boot was paid: Enter $0 for the Acquisition Value for the Internal book(s)
   4. Save the asset.

For more information about taxable exchanges see the Taxable Exchange Help topic in your Depreciation product.