Any advantage on "Selling" or "Convert to Personal Use" a Business Used Vehicle?

[nahcar]

My wife plan to close her Self-Employed business as a Real Estate Broker this year. She has used her SUV since May 2008 for business, but not 100%. The cost of the SUV was $49,496. The business use percentage varies with as high as 97% in 1 year, but most of the years had less than 50%. It was even less than 1% in 2020. The total depreciation (S/L 5 yrs) taken was $12,657. I read the IRS publications and others' questions in the aspect of Disposition of Business Assets. It seems all prior depreciations will need to be recaptured as income in the year of the "disposition". Is it right? How do we recapture the depreciation in the 2021 return? Selling the SUV or keep and convert it to 100% Personal Use??

Thank you very much in advance!

[ColeenD3 · Accepted solution]

No matter when the vehicle is sold, the basis will have to be adjusted for the depreciation that as taken. If you convert to personal use and later sell it or trade it in, you will still have to adjust the basis if you ever sell it. Since you did not take accelerated depreciation and dispose of the vehicle before the end of its useful life, you do not need to recapture the depreciation.