Self employeed vehicle disposal

[kemo1a]

I disposed of a vehicle for being self employeed. There is a loss. I was reading that disposal of a vehicle requires paper filing is that true if there is a loss as you cannot claim any of it

[DianeW777]

No, that's not true.  Follow the steps below to enter the appropriate information to show the sale of the vehicle and the removal from business use. 

Total all of the business miles for the life of the vehicle

1. Total all miles on the vehicle for the life of the vehicle
2. Business miles divided by total miles = Business Use Percentage for the life of the vehicle
3. Take the original cost of the vehicle x the business use percentage = Business Cost
4. Take the sales or trade-in price x the business use percentage = Business Sales Price
5. Calculate the following:
   1. If you used only SMR: all of the business miles by year with the rate in the SMR for depreciation (chart below) to arrive at the total depreciation considered used by the IRS; OR
   2. Total all of the actual depreciation expense used for the traded vehicle (see that information in the Vehicle screen
6. When you go through the vehicle information be sure to select 'Sold, disposed of, etc....' then do not indicate it was sold.  You must say 'Yes' it was converted to personal use.  This will eliminate any sales information in the vehicle it self.
7. Once you have completed the information in that section you will follow the steps below to enter your sale:
   1. Go to Less Common Business Situations
   2. Scroll to Sale of  Business Property
   3. On the next screen select Any Other Property Sale
   4. Use the information from step 3 and the depreciation from step 6 to complete your sale
   5. Select Sales of business or rental property that you haven't already reported.
   6. Answer 'Yes' to Do all of the following apply...?
      1.  Description of the Property (Vehicle make/model/year)
      2. Sales Price/Sales Expenses 
      3. Date acquired and date sold
      4. Cost
      5. Depreciation
8. If the personal use portion of your vehicle is a loss there is nothing to report for that portion of the sale/trade.

Annual Depreciation Component Breakdown (for more years see the chart in IRS Pub 463)

• 2025: $.33
• 2024: $.30
• 2023: $.28
• 2022: $.26
• 2021: $.26

[kemo1a]

I have another question with these steps.   Car was used over 5 years do I still put a depreciation amount taking on he property?

It doesn't look right. 

 96 business portion for sales price  (400 .24) car was scraped to junk yard

528 business portion for cost of property (2200 .24)

if depreciation needed for SMR life of car 2459.48

It comes up with sale of property at 2027

[AmeliesUncle]

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@kemo1a wrote:

 96 business portion for sales price  (400 .24) car was scraped to junk yard

528 business portion for cost of property (2200 .24)

if depreciation needed for SMR life of car 2459.48

It comes up with sale of property at 2027

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I don't understand the "96" and "528".  What are those?

If the business percentage of the purchase price was $2200 and the business portion of the sales price was $400, you have a $400 gain.  

When entering the amount of depreciation, only enter $2200 (you had $2459, but don't enter more than the business purchase price).

If your business qualifies for QBI, you will also need to adjust the QBI amount to factor in this gain. 

[kemo1a]

96 business portion for sales price  (400 sold x .24 business use of car 24%) car was scraped to junk yard

528 business portion for cost of property (2200 original purchase as personal until converted x.24)

if depreciation needed for SMR life of car 2459.48. When using depreciation amount per year per mile added up from 2019 to 2025

It comes up with sale of property at $2027 in turbo tax

Looking at your reply it would be 96 for sale

528 for cost

528 for depreciation?

[AmeliesUncle]

Ah, that makes sense.  

Yes, $96 for sale, $528 for cost and $528 for depreciation.  Total taxable gain is $96.