Traded 100% business vehicle for personal vehicle

[Green H]

@RobertB4444 Thanks for you reply

I do understand what you said, however, after business is closed, I don't have any schedule C to file. Where should I enter the vehicle  information if I sold or disposal in the future ?  Thanks 

[ThomasM125]

Once the business is sold the vehicle becomes a personal asset. If you sell it at a loss then you don't report it on your tax return since you can't deduct a loss on a personal asset. If you sell it at a gain, you would report it as a sale of a business asset and the gain would be a capital gain except for the portion equal to depreciation, which would taxed as ordinary income.

If you report the sale at a gain, you would enter it the Less Common Business Situations section, which is in the business section of TurboTax:

You will see a screen where you can enter the cost, sales price and depreciation on the vehicle.

[Edited 3/14/24 @6:15 PM EST] @Green H

[AmeliesUncle]

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@Green H wrote:

@AmeliesUncle  I didn't use any  Bonus, Section 179 or 200%DB

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Then as the other answers indicate, nothing needs to be done until it is sold or otherwise disposed.

If you had used any (or all) of those three things, then the answer would be different.

[Green H]

@ThomasM125  

So even I don't have business, I still need file that on the business section on TT when I sell the car if there is a grain? 

[Green H]

@AmeliesUncle  If I had bones depreciation or section 179, How should I do that?  is that same way, calculate how much depreciation I took total in the business years, basie cost - those deprecation. If I sold car more that that number, I need to report, if I sold the car less than that number, I don't need report anything ? 

[RobertB4444]

In your case the car is fully depreciated for 80% of it's value.  And - even though the business is closed - it is a business asset.  

So it has become your personal car but technically you're driving around in a car that belongs 80% to a closed business.  When it is sold it is like the business comes back to life for long enough to sell the car.  So you enter it as a sale of business property.  

Because it is fully depreciated that means it is worth $0 on the business 80% and the personal 20% is still there.  So if you sell it for less than 20% of what you paid for it you don't have to report it at all.  If you sell it for more than 20% of what you paid for it then every dollar over that 20% is a dollar of profit and has to be reported.

Bonus depreciation is still taxed as regular income when it is recaptured.

@Green H 

[Green H]

@RobertB4444 Thanks for your reply,

However, in this five years, every years usage is different. sometimes 80%, sometimes 85% 78%.  How should I calculate that?

If the car is used for 100% of business, after fully depreciated. does it mean whatever sell price I sold, I don't have any profit, because it has been fully depreciated?  

[RobertB4444]

You won't have to calculate the business use percentage because you just need to track the accumulated depreciation.

No.  If it is 100% depreciated then 100% of the sale price is taxable.

@Green H 

[Green H]

@RobertB4444 

I see.

So if the car has only been depreciated for 3 years and sold, sold price minus any accumulated depreciation in those three years.  If the number is higher than any left depreciation, there is a gain, that will be taxable income. If the number is lower than any left depreciation, there is a lose. I dont need to do anything. Is that correct ?

[ThomasM125]

You would take the cost of the vehicle less accumulated depreciation to determine the cost basis of the vehicle. If you sell it for more than the cost basis, you would need to report the sale of a business asset as you have a gain equal to the sale price less the cost basis. The gain will be a taxed at ordinary income tax rates up to the amount of accumulated depreciation deducted, and any amount over that will be taxed at capital gain tax rates.

If you sell it at a loss, meaning sales price less than cost basis, you don't need to report the sale as the loss will be a personal loss which is not deductible. @Green H 

[Green H]

@ThomasM125  Thanks for you reply.  If I give the car away instead of selling it. What should I enter? If the car cost baise is 10K and has been depreciated for three years total 5k?  

[ThomasM125]

You wouldn't have a gain associated with gifting the car to someone, so you wouldn't have to report that on your tax return. It is under the gift tax yearly allowance of $17,000 so that wouldn't be a factor either. The cost basis for the person receiving the gift would normally be equal to your basis, but it can vary depending on if the recipient sold the property at a gain or loss. You can learn more here:   Basis of gifted property @Green H

[Green H]

@ThomasM125  Thanks 

[Pvdiii]

After entering the sales price from a trade in, what are included in expenses of sale? All expenses like clerical fees, document delivery fees, management insurance services, title fees and filing fees?  All fees or just certain fees? 

[AmyC]

When you sell a business vehicle, you can no longer do a trade-in or like-kind exchange on your taxes. You sell one vehicle and purchase a new one on your taxes. Like-kind exchanges completed after December 31, 2017, are generally limited to exchanges of real property not held primarily for sale.

Pub 463 does not mention expenses of the sale, only the sales price. The items you mention sound like purchasing the new vehicle and part of the new basis.

@Pvdiii