Auto depreciation/recapture after giving it to charity

[kaebee]

I used my personal vehicle for business and deducted depreciation over the past 6 years. I gave the vehicle to charity in 2019. What do I need to report with the depreciation and/or recapture?

[RobertG]

You should not have any deprecation recapture on a donation because recapture is limited to the gain on the disposition of property, and you have no gain.

If the vehicle is shown on a business schedule, like a Schedule C or Schedule E, indicate that you converted the property to non business use. 

If you are prompted for a disposal date, enter the date you made the gift, with no sales price or expense of sale.  

[AmeliesUncle]

I think recapture may apply because the "Listed Property" fell to less than 50%, which requires recapture, especially if Bonus depreciation or Section 179 was taken.

[Yupthatsme19]

Would we recapture the deduction under depreciation deduction? My depreciating deduction is $4,190. Recovery period is 5.00. How would I calculate the recapture after conversion to personal use after the first year? 

would I have to do this every year? 

[ColeenD3]

No, you only have to do this once, in the year of conversion. Simply put the date that you converted it to personal use and the program will calculate the recapture.

[ColeenD3]

When did you convert? 2021? You would need to go back to the vehicle section of Schedule C and go through the entire interview until you come to the section that will let you say that you disposed of a business vehicle. There you can mark the conversion.

I can't speak to what is on the 4562 since I don't know what information you have entered or omitted.

Support

[Yupthatsme19]

@ColeenD3 I converted in 2021 yes. The only form I filed out was 4562 under listed property on 2020 tax return. 

I stopped using it as a work vehicle in 2021. 

Also the TurboTax form is telling me to recalculate the recapture. The only depreciation reduction I have is $4,190 with a recovery period of 5.00. 

Would the recapture be $3,352 for the remaining 4 years? 

I apologize for the multiple posts. 

[ColeenD3]

I don't know the numbers but I will give you an example.

Auto purchase price $20,000. Section 179 taken on entire amount=$20,000 deduction on Schedule C. You are right that an auto has a 5-year useful life.

First-year depreciation on a 5-year asset is 20%. This means that if you had taken regular MACRS depreciation, you would have only gotten a $4,000 deduction in year one. Since you took the entire $20,000 in one shot, you have to recapture the $16,000 that you took that you were not entitled to, since you converted to personal use. That figure is an approximation since you probably used it for business for some portion of 2021.

You can use this formula to check your own math. I also gave you a link to the phone support in one of those answers.

[Yupthatsme19]

@ColeenD3  Where is the link to phone support? 

my total depreciation deduction for the car was $4,190. Cost basis of the car was $20k and change. If did not take the entire amount just the one year depreciation which totaled to $4,190. 

I was instructed by turbo tax to add the deduction of $4,190 as other income. Would this be correct? 

[DianeW777]

TurboTax would automatically calculate the recapture of depreciation as income since you converted the vehicle back to personal use as indicated by our Tax Expert @ColeenD3.

If you need further assistance you can call TurboTax at 800-446-8848 and schedule a callback from us if no one is available immediately.  Also and possibly more conveniently you can use our online page by selecting the link below.

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