Un-merge business vehicles?

[incipient1]

I am self-employed and enter business vehicle mileage on Schedule C. In previous years I've always just entered totals for work vs personal mileage as just one "generic" or "merged" vehicle in Turbotax, because I had been tracking mileage but not which vehicle I used for which trip.  Since all I had was counts of business vs personal mileage, but no record of how much of each kind of mileage applied to which vehicle, it all just blended together on my tax return.  The date I "placed the vehicle into service" is just a generic date from before I owned either vehicle. I've even had vehicles I've used for a mix of work and personal use that I've sold in past years but never entered that info into Turbotax, because the vehicle was not its own distinct entity to begin with on my taxes. So from year to year I've just had overall totals of work vs personal mileage that were agnostic to which vehicles I used for how much of it, or whether the vehicles I used in a given year were the same as in previous years.
 
Starting last year (1/1/2019) I began tracking mileage in more detail, so for 2019 I now know how much mileage applies to which vehicle, of which I have two. Both are used for both business and personal mileage.  Two questions:

1. Is there a benefit to me going in and separating these two vehicles into their own entities in Turbotax this year?  Or should I just as well keep them merged/generic as it has been in previous years?

2. If I should separate them, how should I go about this?  Here's my guess but tell me if I'm wrong: Maybe tell Turbotax that I took the generic/merged vehicle "out of service" on 1/1/2019.  It asks if I sold the vehicle and I say no.  It then eventually asks what I paid for the vehicle to start with.  Maybe here I just add together the purchase price of the two vehicles (even though I bought them at different times from each other)? Then I go in and add two new vehicles, indicate that I placed them both in service on 1/1/2019, and proceed to enter the distinct mileage info for each one?  Any other caveats or nuances?

[KarenM90 · Accepted solution]

1.  In answer to your first question about separating the two vehicles into their own "entities" in TurboTax this year, a most definite yes.  IRS requires that you track (for each vehicle used wholly or in part for business)  track beginning and ending odometer readings, miles for each business trip, business purpose, date and time.   Do not merge vehicles, keep good mileage and expense records on each vehicle, always.

2.  I recommend, for this year, that you dispose of all the "generic vehicle groups"  as of 1/1/2019 with no gain or loss recognized.  Make note of the book value, and allocate it based on the original purchase price or fair market value of each remaining vehicle (be consistent) and then "purchase" each vehicle in TurboTax at the allocated book value (adjusted cost basis less depreciation)  and continue deprecating them from that value forward.  If you used mileage, you will need to determine the Equivalent Vehicle Depreciation.  (Please see the Depreciation section of this article:  Business Use of Vehicles) in order to determine the book value of those vehicles.

3.  You need to go back and amend your previous years' return and reconstruct your business use and personal use of each vehicle and report them correctly.