How to fill out form 4797 for sale of car used for business

[special2sum1]

I bought a car in 2011 for personal use. In 2013, I started using the car for business with my current employment. In 2013 and 2014 I wrote off the business miles I drove not including my commute miles. In October 2015, I sold the car and replaced it with another vehicle and will be writing off business miles again for 2015. Since the car was sold, it is telling me to fill out Form 4797. When I fill out the details (bought car for $2700 in 2011 and sold it in 2015 for $300) of the transactions, I am getting more money back on my taxes.  I don't feel like that should happen so I feel I am doing something wrong.  How do I properly report this? I haven't depreciated the car  over the years, I just wrote the mileage off with standard mileage deduction.

[SusanH]

It is quite possible that the sale of your business vehicle may have generated an additional refund amount. Let me explain how that works.

When you sell an asset that you've used in business you can have a gain or a loss on the sale. If it had been something like a computer or office furniture, you would have easily been able to see the numbers you were working with...your cost less and accumulated depreciation.

When you take the standard mileage rate instead of actual expenses on a vehicle, you may not realize that you were also taking depreciation. 

Depreciation amount that was included in the standard mileage rate:

• 2013 - 23 cents
• 2014 - 22 cents
• 2015 - 24 cents

So for every business mile you drove, you were actually deducting part of your depreciation. TurboTax took the information from previous years and calculated the depreciation that was included in the standard mileage.

Using some of the numbers you gave above - 

• Cost $2700
• minus depreciation (amount unknown but let's say it was $1000 for simplicity)
• your basis would be $1700   [$2700-$1000]
• Sold your car for $300
• Your net loss on it would be $1400   [$1,700-$300]

You are allowed to include the $1400 as a business loss 

Please note that if your business use was not 100% then only the percentage of business use would be used in the calculations [i.e. 60% business use then 2013 depreciation would be only 13.8 cents per mile]

[wabekem]

I know this thread is from last year, but special2sum1, did you figure out what this all means?  I am struggling this year with something similar.  It looks like form 4797 if for S Corp though and we only have a 1-person business so we complete the Schedule C with our personal taxes.

[okim]

Something does not sounds right.  I purchased a vehicle for $17,000 over 15 years ago.  Last year is the first and only year I used this vehicle for business.  I deducted approximately $100 for depreciation last year.  Being a 15 year old vehicle, I can only sell it for $500.  Can I claim a loss of $16,600 ($500 sales price - $17,000 cost - $100 depreciation)?