Recording an Asset Disposal in ProSeries Fixed Asset Manager

When a business sells, scraps, or otherwise disposes of a fixed asset, accurately recording that disposition is essential for correct depreciation in the current year and proper gain or loss reporting on the tax return. ProSeries Fixed Asset Manager provides a dedicated disposal screen for this purpose, and understanding how each field works helps ensure the numbers flow correctly to Form 4797.

Accessing the Disposal Screen

To view and edit disposal information for each asset basis in a client file, open the View menu and select Disposal. The screen presents fields organized by basis, displayed in columns. You can use the Tab key to move from field to field within a single basis, and the Left and Right arrow keys to navigate from one basis column to another. Some fields are calculated automatically or disabled depending on which basis is active.

Starting the Disposal Entry

The first field — “Has this asset been disposed?” — must be set to Yes to unlock the remaining disposal fields for that asset. Until this is toggled on, the rest of the screen remains inactive.

Sale Description

Each disposition requires a sale description of up to 50 alphanumeric characters. While every disposed asset needs its own description entry, the same description can be reused across multiple assets. This is useful when several items were sold together in a single transaction.

Property Type and Form 4797 Routing

The Property type field controls where the disposal information prints on Form 4797, Sales of Business Property, when the data exports to ProSeries. Available options include:

• No entry — the disposal will not export to ProSeries at all
• Trade or business property (Section 1245)
• Cattle and horses (Section 1245)
• Other livestock (Section 1245)
• Real property (Section 1250)
• Land (Section 1231)

Selecting the correct property type is critical because it determines how the gain is characterized on the client’s tax return — ordinary income recapture versus capital treatment.

Date of Disposition

Enter the full month, day, and year the asset was disposed of. This date has two downstream effects: it governs how much depreciation is calculated for the asset in the current tax year (mid-month, mid-quarter, or half-year conventions may apply), and it influences how the gain or loss is treated on the return. An incorrect date can distort both the final depreciation deduction and the recognized gain.

Sale Price

Enter the actual sales price or the fair market value of all property or services received, calculated before deducting any selling expenses. The adjusted basis is then subtracted from this figure to determine the gain or loss on the disposition.

Expense of Sale

Costs associated with the sale — such as advertising, commissions, or delivery — go in this field. These expenses are added to the asset’s cost or basis to arrive at the adjusted basis. Negative amounts are not permitted here.

Investment Tax Credit (ITC) Taken

If the asset had Investment Tax Credit or other credits that affect its sale, enter that amount. The credit figure is subtracted from the cost or basis when computing the adjusted basis, which in turn affects the gain or loss calculation.

Display-Only Fields

Three fields appear for reference but cannot be edited from the disposal screen:

• Cost or basis — shows the initial cost or basis for the active asset
• Section 179 deduction — displays any Section 179 deduction previously taken
• Special Depreciation Allowance — shows the bonus depreciation (Section 168(k)) claimed under the 2002 and 2003 Tax Acts

Any adjustments to these figures must be made on the asset’s original entry screen, not the disposal screen.

Disposition Basis

For assets acquired in a like-kind exchange where the property given up was used less than 100% for business, you can enter a separate regular and AMT basis for disposition purposes. The adjusted basis must be reduced by the prior depreciation attributable to the personal-use portion. Enter the total recomputed regular and AMT basis here so the gain or loss reflects the correct figures for both tax systems.

Depreciation After 1975

For Section 1250 property, this field captures any additional depreciation taken after 1975, which is needed to compute depreciation recapture. This applies to MACRS residential and nonresidential real property as well as other Section 1250 assets depreciated on a straight-line method. The recapture rules can create ordinary income to the extent of prior depreciation, making accurate entry here essential for correct tax treatment.

Key Takeaways

Recording a disposal correctly requires attention to the disposition date, accurate sale price and expense figures, and the right property type for Form 4797 routing. The display-only fields serve as a checkpoint — if the cost, Section 179, or bonus depreciation figures look wrong, those corrections belong on the asset entry screen, not the disposal screen. For assets with complex histories like like-kind exchanges or post-1975 depreciation recapture, the disposition basis and depreciation fields ensure the gain or loss lands in the right place on the return.