Sold Fully Depreciated Sole proprietor vehicle

[Dissatisfied Person]

I purchased new Business vehicle for $46800 in Dec 2019, & used Sect 179 for 2019.

Sold same Jan 31, 2025 for $34,000.

Both StraighLine recalculation &/or 179 shows depreciation of $46800 over the 5yr period…(sold in year 6), thus basis=$0.

Turbotax software calculates (reaffirmed by 5 hour “expert” call) that the “Business Portion” of sales price would be $2,832.20 (34000 x 8.33%)?(presumably since only used for business for 1month in 2025…i.e. 1/12= .0833)

Is this correct? Why wouldn’t the full $34k be recognized as income, instead of “prorated” for the year based on the Jan 31st date sold?

Please advise.  Thank you.

[DianeW777]

It depends. The varied use of the vehicle each year does create the need for some different steps when a vehicle is sold or traded (same as sale in tax law). 

It's important to go through the vehicle asset and make sure you change any selections you may have made such as sale date, etc. Once you have deleted your entries, then go back to select that it was 'sold, traded, converted to personal...etc' and converted to personal use and no sale date. Next, follow the steps below to enter the sales portion of your vehicle.

First start by gathering the required information in steps 1-6 below. Based on your information you can ignore the standard mileage rate (SMR) information below because it wasn't used on the vehicle you traded.

1. Total all of the business miles for the life of the vehicle
2. Total all miles on the vehicle for the life of the vehicle
3. Business miles divided by total miles = Business Use Percentage for the life of the vehicle
4. Take the original cost of the vehicle x the business use percentage = Business Cost
5. Take the sales or trade-in price x the business use percentage = Business Sales Price
6. 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)
7. 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.
8. 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
9. If the personal use portion of your vehicle is a loss there is nothing to report for that portion of the sale/trade.

As you indicated, the business portion of the sales price/trade price will be taxable up to the amount of depreciation expense used on your returns since purchase.

[AmeliesUncle]

It was 100% business use the entire time?  If so, don't follow the directions in the other response - report the sale in the vehicle section.

As for your problem, go back through the questions and look for the one that asks if you kept track of personal miles.  Say YES.