USA Transfer of Property - Journal Entry

[PharmShaun]

Hi, I know I should know this, but I've been doing accounting for a while and I've never encountered this exact situation before. For tax purposes, the business owner transferred his property to someone else, he did it through what we call in Florida, a "Quit Claim Deed". The price they sold it for on the quit claim deed was only $10. What would the Journal Entry be to get rid of the loan and remove the asset from our books? Is there a difference between this being a "transfer" for $10 versus a conventional sale?

 

[kirby]

Just treat as a sale. But, check on the legality of “getting rid of the loan”. If a bank made the loan you cannot just change who the borrower is without bank ok.

 

[hawaiitax]

PharmShaun, You need to have more information before you can record the journal entry. You indicated there was a loan on the property, was the loan assumed by the buyer? If the loan was assumed, the selling amount has to include the value of the loan assumed. If not, did the lender forgive the loan, if so the seller may have CODI to record? The transfer of property is either a sale or a gift. If you purchase an automobile the seller "transfers" the title to you as part of the sale.

In addition, you will need to determine if there was a gain or loss on the sale of the property. Was depreciation recorded on the equipment. Doesn't Florida have a tax that needs to be paid for the sale of property?