Q:

Subject: Setting up leases in QuickBooks

We found your web page with tips on QB. We found it very useful, but we were hoping you could help us with a question.

We are a small business that sells less than 10 cars a month. We carry the lease on some of the cars and would like to be able to track payments and have them show against the outstanding balance in QB. Is there a way to use the Loan Manager to track Asset loans as opposed to a Liability loan? If so, could you please give us instructions on how to set this up. If not, do you know of an add-on that would be able to handle this?

A:

As much as I like QuickBooks as the best bookkeeping program for small businesses, the impression (given by Intuit) that it can handle all kinds of record-keeping is just plain wrong.

I have written before of how inadequate the billing function in QB is, except for simple basic matters.  As a result, we have been using TimeSlips for decades.

Keeping track of loan amortization activity is something else that QB has no capacity for.  Quicken had an elementary amortization function that always required manual over-rides to match the actual payment timing.

There are two loan amortization programs that I can recommend. 

For simple low volume loan tracking, TValue 5 from Time Value Software is excellent.  I have been using it for several years for cases where a standard consistent payment schedule isn’t enough. 

For high volume note servicing, the best software is NoteSmith.  I have several clients who have been using this for many years to handle their notes.  Some of them have several hundred notes outstanding at a time and NoteSmith has allowed them to keep track of them very efficiently.

Unfortunately, neither of these programs has the ability to export loan activity data to QuickBooks.  While this does result in some duplication of data entry between the two programs, it isn’t that bad a situation.  For clients with only a  few notes, editing each payment detail in the QB register gives us a match to the detailed amortization schedules.  For those with hundreds of notes,we usually make lump sum adjusting journal entries to bring the QB balances into synch with the NoteSmith detail.  

Either of these should work for your situation.

Good luck.

Kerry Kerstetter

 

Q:

Subject: Sale of primary residence

I will appreciate if you can help me.

To take advantage of the $500,000 capital gain advantage, does the property have to be in both husband and wife’s name or the requirement is that you should be filing a joint return.

Thank you.

A:

 
In order to claim the full $500,000 exclusion, you do have to file a joint 1040.

It is only required that one of the spouses had owned the home for two out of the previous five years.

However, it is required that both spouses occupied the home as their primary residence for two out of the previous five years.

If both spouses didn’t meet the two-year use test, the amount of gain that can be excluded is pro-rated.

Your personal tax advisor can help work with real numbers for your situation.

Good luck.

Kerry Kerstetter

 

How Cooking the Books Works – Some lessons on the creative accounting skills used by Enron and their ilk, courtesy of HowStuffWorks.