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Sale a car from S-corp inventory to Owner of Company

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  • Sale a car from S-corp inventory to Owner of Company


    I have a question.

    Company S-corporation. The company has had long-term investments from the owner.

    Now there is a need to transfer the car from the company’s inventory to the owner’s property by selling the car to the company owner with a Sales Tax.

    How to correctly reflect this transaction (or transactions) in QuickBooks (QuickBooks Pro - 2004 Edition) in order to use the previous investment, and not pay the car owner again with a personal

    account of owner to a company business account for a car?

    Investments are shown on account Loan from Owner (Long Term Liability)



  • #2
    Use a sales receipt

    line one: the car inventory item, qty and price, taxable
    line two: A service item you create which is linked to the loan liability account, qty negative one, and the total amount (car + sales tax)
    save the zero dollar transactions


    • #3
      Thanks a lot! I'll try.


      • #4
        If the owner were a tax client of mine, I would suggest a general journal entry with a credit amount to the car inventory account and debit amount to stockholder's loan. This would get car off books and decrease the amount of stockholder's loan, and result in no sales tax due (since the transaction would not be a sales transaction).

        Caution: There may something in QuickBooks peculiar way of handling inventory that would negate this simple procedure.

        For what it is worth, a loan to the company is not an investment in the company. Had the "loan" been booked to the owner's equity account, it would be more obvious that this is not a sale but a return of capital.
        Lorin Browning, Ph. D.
        Fellow -- National Tax Practice Institute


        • #5
          Thanks for info.