I sold a car used in rental property, please explain tax implications, and how I enter the sale in Trutbotax Online.

[DianeW777]

Yes, you definitely understand how it works.  Your details are completely accurate and you will be all set on the next vehicle used for business when you sell or trade it.  

FYI:  A trade for tax purposes constitutes a sale under the current tax law.

@mnalep 

[mnalep]

Thank you, DianeW777.

It gets confusing trying to relate my layman's language about how I see the car, versus the IRS language, and then trying to shoehorn my data in TurboTax online forms. On top of that I did not know what the result was supposed to be! I appreciate your help!

Matt

[AmeliesUncle · Accepted solution]

TurboTax is NOT set up to report the sale of a vehicle (or other asset) that has varied in business percentage from year to year.  So you should not be reporting the sale in the vehicle section and that is why it is coming up with weird numbers.

After telling the vehicle section you converted it to personal use, you should report the sale in the "Sale of Business Property" section.   You would then report it as Costing $500, you took $500 of depreciation, and sold it for $100.

[mnalep]

Thank you to everyone who replied, and particularly AmyC & DianneW777 for helping me understand what is going on, and how to handle the sale of the depreciated car used 25% of the time in my rental activity. (see a few comments above this one.) I filed the taxes Saturday. The tax return ended up showing a $100 gain, split as $90 gain (on line 6 of form 4797), and $10 gain (on line 4 of Schedule 1) - I'm not sure why it was apportioned like that, but the $100 gain is accounted for.

After being explained what my gain was supposed to be (25% of $400 selling price = 100) I ended up manually putting hat value in the Sale Price form as seen in he 2nd screen shot below using TurboTax Online:

BTW I got to that from by making the selection NONE OF THESE APPLY as shown in the image immediately below:

[AmeliesUncle]

You are supposed to check the box that the business percentage varied (assuming it actually did vary) and report it the way I told you.

Even if your tax return shows a gain of $90 and $10, it is unlikely it is correct.   It should all be depreciation recapture, but the splitting of it seems that it is treating part as depreciation recapture and part as long-term capital gain (which is wrong).

[mnalep]

Well, two things, first I did not see any place to indicate whether the business percentage varied, or, that it was constant. Secondly, I filed the return last Saturday. But, I appreciate your input.

[AmeliesUncle]

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@mnalep wrote:

Well, two things, first I did not see any place to indicate whether the business percentage varied,

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In your comment before right before mine, your first screen shot above shows it.  But you checked "None of the above" instead.