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jcc4hire
Level 1

Dep allowed/ allowable is too large. Depreciation cannot exceed business basis.

Purchased a business vehicle in 2017 and have claimed mileage deduction since putting the vehicle into service. Truck was used 100% for business (landscaping). At the end of 2020 we purchased a new business vehicle and sold the previous. The original cost of the truck was $12500. We deducted well over that in mileage deductions (around $18k from the included depreciation rate in the mileage rate.). We sold the truck for $3600. No matter what numbers I put down, when I go to file it claims the depreciation is too large. The only way it goes through is if I put 0, but I'm unsure if that will cause issues/is incorrect. 

1 Best answer

Accepted Solutions
AmeliesUncle
Level 11

Dep allowed/ allowable is too large. Depreciation cannot exceed business basis.

Your gain/loss basis would be $12,500 and the depreciation that needs to be entered is $12,500 (don't enter an amount larger than your original Basis).  It should show a gain of $3600 (the total sales price).

 

If the program is not cooperating with that, you can either (a) wait until TurboTax fixes it or (b) say you converted the vehicle to personal use, then report the sale in the "Sale of Business Property" section.

View solution in original post

7 Replies
wgfpd154
Level 3

Dep allowed/ allowable is too large. Depreciation cannot exceed business basis.

I am having the same issue with a vehicle used for business/personal use, which was sold in 2020 after claiming mileage deduction in previous year. It would not allow anything but 0 to go through. Did not allow any mileage deduction on 3 months of service though. Hoping someone can answer this here before I file.

AmeliesUncle
Level 11

Dep allowed/ allowable is too large. Depreciation cannot exceed business basis.

Your original post has the indicator that you are using the "Business" version, which is for Corporations and Partnerships.  Is that correct?

 

Go back through the vehicle section and double check that it is showing 100% business use for the current year. 

 

If there is a question that asks if you kept track of personal miles, say YES.

 

Are you entering the sale in the vehicle section?  Or are you entering it elsewhere?

jcc4hire
Level 1

Dep allowed/ allowable is too large. Depreciation cannot exceed business basis.

Sorry, self employed is the version we are using. Yes, 100% business use, kept track of all miles, I put in the mileage, and number one there is an issue apparently and it's not allowing me to claim mileage now. But from what I've seen that's an issue with Turbotax itself. So from the very first question it asks if you stopped using in 2020 which I put yes and put the date. Continue through questions about mileage and then it asks for the sale price. I put in the sale price. Then it asks for 'basis for gain/loss (enter 100% of basis)'. And the instructions are 'When you dispose of a vehicle you must figure out your basis for your gain or loss.

To do this, take your original purchase price add to it any major improvements you've made to the car (like a new engine) and subtract any depreciation that was allowed or allowable (look at your past tax returns for this).' 

Then it goes to prior depreciation and asks for depreciation equivalent of standard mileage for all the years in service, which is more than the truck ever cost because we have heavy mileage with lawn care routes.  And I put in what I feel like is accurate, it checks everything says it's fine, but at the VERYYYYY end when I pay and go to actually file I get an error no mater what I put in saying that the depreciation is too large. Unless I put in zero, but I just want to make sure I'm putting in the correct numbers so I don't risk audit. I just need very basic instructions on what the loss/gain basis is and what the depreciation should be since nothing I put in will work, even if the numbers are the same so clearly not larger than the basis.

jcc4hire
Level 1

Dep allowed/ allowable is too large. Depreciation cannot exceed business basis.

From the reading I've done, I think Turbo Tax itself is having an issue with the mileage deduction because it's not letting me claim it either. And I've never had any issues before.

AmeliesUncle
Level 11

Dep allowed/ allowable is too large. Depreciation cannot exceed business basis.

Your gain/loss basis would be $12,500 and the depreciation that needs to be entered is $12,500 (don't enter an amount larger than your original Basis).  It should show a gain of $3600 (the total sales price).

 

If the program is not cooperating with that, you can either (a) wait until TurboTax fixes it or (b) say you converted the vehicle to personal use, then report the sale in the "Sale of Business Property" section.

View solution in original post

jcc4hire
Level 1

Dep allowed/ allowable is too large. Depreciation cannot exceed business basis.

See that's exactly what I put in and it would not let me proceed upon final inspection. While I'm waiting on Turbo Tax to fix the mileage section I will try b and see how that goes. I appreciate the help! I just wanted to make sure I was on the right track. 

rayxchui
New Member

Dep allowed/ allowable is too large. Depreciation cannot exceed business basis.

The gain is calculating correctly and not giving me an error in Federal.  I am just getting the "depreciation cannot exceed business basis" on the California return

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