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About LinkBacksWhen a fixed asset is sold for a gain, with commission and fees paid to a third party out of the cash proceeds, are the commissions recorded as an expense offsetting the revenue(gain) or as a reduction to the revenue?
Sale of real property
When a fixed asset is sold for a gain, with commission and fees paid to a third party out of the cash proceeds, are the commissions recorded as an expense offsetting the revenue(gain) or as a reduction to the revenue?
I believe it is deductible. It forms part of expense necessarily incurred for the sale of a real property. It is for all intents and purposes, deductible.Originally Posted by Reclassed
In the interest of having transparent accounts I would book the profit on the sale as "Revenue of Sales of Fixed Assets" and show the commission and the fees separately.
Either version is however correct.
Werner Reisacher
For asset sales use only the traditional method of showing the net gain/loss in the income statement.
The proper tools for transparency are footnotes and/or detailed schedules.
If you sold the property as a lump sum you would be subject to capital gains taxes on any gains you have made on the property. (The price you purchased the property - what it sold for). Those gains can be offsets by capital losses you might have incurred in the stockmarket. Capital gains are 50% I believe.The money would come in under income. Depending on the nature and structure you have setup (are you doing this personally, through a small business or is this a corporation). The income would be treated and taxed as income, you could have many valid deductions depending on how you structure the deal.
At the end of the day, I'm not sure it really matters - unless there are tax considerations I'm unaware of.
But based on the information you're giving, the bottom-line effect is the same either way.
Both methods are acceptable -
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