Lines 51 & 52 on Car and Truck Expenses Worksheet

[Caboose1127]

Hi - I am having difficulty with lines 51 and 52 on my 2023 return for Car and Truck Expenses Form. I never understood depreciation. I traded my car in Sept 2023 for $7000 for a newer used vehicle that I am going to take the standard mileage deduction for it because the mileage will be very low in 2024. For the sale price Turbo Tax came up with 19.22% which is $1345. Depreciation was always entered but, as I said, I don't understand it. In 2022 PRIOR was $6509, CURRENT was $566 if that helps at all. Any help for me?

Thank you very much for any suggestions.

[JamesG1]

Depreciation allowed or allowable on lines 51 and 52 of the Car and Truck Expenses Worksheet is the depreciation taken in 2023 and prior years on the vehicle. I assume that you are seeing the $6,509 + $566  = $7,075 on those lines?

You report depreciation expense on a vehicle whether you use the actual expense method or claim the standard vehicle mileage rate.

When you claim actual expenses, depreciation is a calculation that may be viewed on the tax return.

When you claim standard vehicle mileage, depreciation is a component within the standard vehicle mileage rate.  For instance, for 2023, the depreciation component equals $.28 of the standard vehicle mileage rate of $.655 per mile.  See TurboTax Help here.

Depreciation is recaptured on the disposition of the vehicle because the IRS labels a business vehicle as Section 1245 property.  Any gain recognized on the disposition of Section 1245 property will be classified as ordinary income up to the amount equal to the depreciation claimed.

The computation of the disposition is reported in Part III of IRS form 4797 Sale of Business Property.

If this does not completely answer your question, please contact us again and provide more information.

[Caboose1127]

Thanks so much. I still have a question on this. On line 51 it shows $7416 and line 52 $7231. They are both in red. If I change line 51 to 6003 which is the depreciable basis for 2023 and change line 52 to zero Turbo Tax accepts it and I then have no errors when doing the review. Would this make sense?

[KrisD15]

No,

Line 51 is the depreciation that was taken (or could have been taken) on the vehicle before it was sold. 

If in 2022 the prior year depreciation was 6,509 and current 2022 depreciation was 566  then at the end of 2022, there was 7,075 depreciation taken. 

If you used the vehicle in 2023, I ASSUME the depreciation was 341 so line 51 would show 7,416. 

Line 52 concerns Alternative Minimum Tax. 

TurboTax cannot compute the gain or loss on a business vehicle if its use varied over the years. 

The new vehicle has nothing to do with selling the old one and vice-versa. 

We are just talking about the old vehicle which you sold. 

To clarify, 

What did you use as the vehicle basis? (Purchase price?) What was the dollar amount?

Look at Disposition Report Column e

Did you use Actual Costs or Standard Mileage (or both)

Is the program showing a gain or loss on the sale? 

[Caboose1127]

Purchase price was $31, 231. 

Not seeing line e under disposition.

I used actual expenses.

The Ordinary income from depreciation capture is $1,345. And that is showing as the sale price and the gain or loss. That's the 19.22% TT came up with.

    Short term and long term are zero.

The AMT is showing as $6003 which is the figure I changed from $7231.

Hope I'm making sense????

[Caboose1127]

Disposition report Column e is showing $6003 with $7416 and $7231 on lines 51 and 52.

[Caboose1127]

On Form 4797 it shows a total gain of $2758.

[AmeliesUncle]

As Kris mentioned, TurboTax is not set up to report the sale of an asset or vehicle that has varied in business percentage from year to year.  You can NOT report it in the vehicle section (well, unless you really know how to manipulate the numbers).

You would need to MANUALLY calculate things and report it in the "Sale of Business Property" section.

In the event the vehicle was originally a personal-only vehicle then converted to business use, it gets even more complicated and I would highly recommend going to a good tax professional.

[Caboose1127]

The car was always used for business and personal reported since purchase. Never just personal use. 

Thanks for all the help. It is appreciated. It was always straightforward until this year with the darn trade in!