Business Auto Depreciation

[jlavs]

We traded in a business vehicle for a new vehicle.  I entered the sold date and amount of trade in for the old vehicle.  It is showing a gain on the sale of $20k.  When I add the new vehicle I entered the amount paid with the trade ($19k)  and the total purchase price ($39k).  It is taking the full $39k as the first year depreciation even though I entered only $10k in as the section 179 deduction.  Shouldn't I be able to take the depreciation over the 5 year term?

[AmeliesUncle]

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@jlavs wrote:

I entered the sold date and amount of trade in for the old vehicle.  It is showing a gain on the sale of $20k. 

When I add the new vehicle I entered the amount paid with the trade ($19k)  and the total purchase price ($39k). 

It is taking the full $39k as the first year depreciation even though I entered only $10k in as the section 179 deduction.  Shouldn't I be able to take the depreciation over the 5 year term?

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If the vehicle was partly used for personal use, and the business percentage varied from year to year, you can NOT report the sale in the vehicle section.  You need to MANUALLY calculate some things and enter it in the "Sale of Business Property" section (or go to a tax professional).

You shouldn't need to enter anything about the $19,000; you just need the $39,000.

There should be an option somewhere to "elect out" of the Special Depreciation Allowance (Bonus depreciation).

[jlavs]

The old vehicle was used 100% for business so the system can handle that calculation.  On the new vehicle, there is a window that asks "did you trade in another vehicle?".  If I say yes (which is my situation), it asks "total cash or loan amount paid with trade-in".  I interpreted this to be asking for the difference between the sales price of $39k and the trade-in of $20k giving an amount of $19k. The next window asks "what did you pay for the new vehicle?" and this is where I put the $39k.  Are you saying that I should answer No to the trade in and not enter the $19k there?

[AmeliesUncle]

I guess it sounds like it is asking for the trade in value, plus the 'cash' you paid, for the total amount.  But there is no reason for the program to ask that.  It only needs to know the purchase price.

Whatever you enter, look at the numbers on the worksheets to make sure it is using $39,000.