Car totaled - how to put this in Quicken for Mac?

willeaton

I have a car that I paid $30K for 3.5 years ago. It has appreciated in value and (unfortunately) it was totaled and the settlement was ~$44K, including sales tax and a $1K deductible. The insurance company sent me two checks totaling ~$43K. I have to wait to get the additional $1K from the other driver's insurance company. I have the car listed as an asset for $30K. How do I enter this in Quicken? Thank you!

Jon

I would first increase the balance in the asset account to match the value of the car. Since the car increased in value you might owe capital gains tax on the profit, so you might want to categorize that increase as a capital gain so it shows up on your tax report. (Edit: it looks like none of the default Capital Gains categories can be used in an Asset account so you'll probably have to create a new category for this. Make sure you mark it as tax related.)

Then I would record the two insurance payments as transfers from the asset account to the bank account where the checks were deposited. Once you deposit the second check that should reduce the asset account balance to zero; I would then close that account.

If some of the insurance check was compensation for expenses related to the accident (towing, rental car, medical (hopefully not that one!), etc) then I would use a split transaction to separate out those portions of the check. You mentioned sales tax so I would split that part out as well.

Tom Young

You WILL have a taxable gain here, at least for Federal tax purposes.

I'm a bit confused about the "sales tax" issue, so I'm leaving that out of the equation.

Assuming that the insurance company paid you $43K for the car and you're due $1K from the other insurance company, then you sold the car for $44K. The comprehensive account entry here would be:

Debit (increase) Cash in Bank Account $43K
Debit (increase) Receivable Account $1K (a new Account in your file)
Credit (decrease) Car Asset Account $30K
Credit (increase) Gain on Sale of Personal Property Category $14K (a new Category in your file)

In Quicken for Windows I'd first create an empty asset Account for the Receivable and create a new Category for the gain on sale. Then I'd make the two deposits to the Bank Account, splitting them out to the relevant Accounts and the Category. You could do it "piecemeal" too.

jacobs

I agree with what's been written above. The only thing I'd suggest differently from @Tom Young is that it may not be worth creating a new receivables (asset) account if it is likely to be used for just this one issue. While what Tom says is exactly right from an accounting perspective, from a practical perspective, you could just leave the car asset account with a value of $1,000 until you receive the other insurance check.