Sale of Business Vehicle Gain, Deprecation is more than Value

[john3madden]

In the summer of 2019, I started my business and began using my really old personal car for business purposes.  I racked up 1464 business miles (16.58 percent of my total miles driven with it for 2019), before it started having major problems. I junked the car for about $125 in November.  When I put it into service, it was worth about $1000.

So I selected to take the standard mileage (58 cents per mile in 2019). Then TurboTax had me report the business portion of the sales price (125 *.1658 = $21).  It then said I have a gain on the sale of business property which I understand to be correct since:

$1000 * .1658 = $165.80 business worth when put into service

But here I am taking deprecation via the standard mileage (26 cents per mile) totaling to 1468 * .26 = $380.64‬ which already exceeds what it was worth when I converted it to a business asset.

I guess my question is, since the deprecation alone (before even considering the sales price) exceeds its worth should I not be able to claim the mileage in the first place?

TurboTax did let me take the mileage though, I'm just confused why.  Also, while I reported the business portion of the sale, the instructions said to include the personal portion elsewhere.  But for the personal portion of the sale, would it not be a loss?  If I used it 83.42% of the time for personal use in 2019, it was worth 1000 * .8342 = $834.2‬0 when in service and I sold it for 125 * .8342 = 104.28.. without thinking of deprecation.. or does it not work that way? Am I just required to report the full amount since it was part business sale?  Thanks for any help!

[RobertG]

Yes, you are allowed to claim the Standard Mileage Rate regardless of the value of the vehicle.  

As for the disposition of the vehicle, 17% of the sales price is $21.  Your business basis can't go below zero, so that's what you made. A de minimus amount.

Yes, you lost money on the personal portion of the sale, since your basis is whatever you originally paid for it, less the business portion.  But since it's personal, you can't claim the loss.