I have a home business and a vehicle that was used for both personal and business use. I have been claiming Actual Expenses including depreciation since 2018 when the vehicle was acquired. In early 2020 the vehicle was totaled and removed from use. The insurance payout is therefore considered a sale and I may have to pay some taxes back on the claimed depreciation. TurboTax knows all the depreciation I claimed and is asking for the business portion of the sale price.
TurboTax's screen says: "Because you stopped using this vehicle for business in 2020, we need to know the business portion of the sales price you received for this vehicle and any expenses of sale, such as advertising or commissions. Normally that would be whatever someone paid you for it - times this vehicle's business use percentage"
Here's my issue. The business use percentage is not accurate for 2020. Because the vehicle was totaled early on. Let's consider an extreme case. Say the vehicle was totaled on January 6th and I only drove 2 trips. What if both were business related? What if both were personal? In one case the entire sale is business income and I pay way more in taxes than I should. In the other case there are no taxes paid back and the IRS doesn't get their cut. Both seem wrong!
Here's another option. What if I add up all my business mileage from 2018-2020 and divide by all miles driven in 2018-2020? This provides an accurate business usage percent not for 2020 but for the entirety of the vehicle's use. This percentage times the sale is the business usage percent.
So which is it? 2020's usage despite the extreme case possibilities? Or a lifetime calculation? Something else?
