Vehicle used 100% for business. Depreciation

[tagteam]

You have a recapture event. Your basis is reduced by the total amount of depreciation deductions taken in past tax years.

You take your depreciable basis (typically your purchase price) and reduce it by the accumulated depreciation amount. What is left is your adjusted basis which you subtract from the sales price to arrive at your gain (which should be all, or almost all, recapture).

[mudtech61]

Tagteam,

Can you simplify this for a non tax person like me?

Depreciation amount taken in 2019 of $51,000 tax year vehicle purchased and business use began.

No depreciation taken for tax years 2020-2023

Vehicle sold in October 2023 for $29,500 (51,000-29,500 = 21,500 lost)

Amend the return and pay tax on $29,500 or $21,500 or percentage based on selling vehicle before 5 years of depreciation had lapsed? Know this was an error and will have to submit a corrected return but trying to figure the consequences/fees/fines and tax liability for the screw-up!

Appreciate your advice. Also your opinion on ownership of vehicle? Owned by me but purchased exclusively for business use?

[tagteam]

I'm going to get @Mike9241 involved here.

You should note that you do not have a loss on this transaction.

If you did not take depreciation deductions during the 2020-2023 tax years you should have done so if the vehicle continued to be used for business purposes.

Thus, it's $51,000 less the amount of depreciation deductions that were taken or should have been taken to arrive at your adjusted basis. That adjusted basis figure would then be subtracted from the sales price of $29,500.

I am curious as to the status of your past returns. You mentioned that you had an LLC with an S corporation election. Is that the case? If so, have you been filing an 1120-S for the corporation? If not, that's a huge problem and you need to consult a local tax professional.

Please check this thread later.

[Mike9241]

don't see the entire thread concerning exactly what happened 

however, paying off a loan on the vehicle has no effect on any gain or loss on the sale of a vehicle

I think you need to see a pro to review what you did or didn't do