Vehicle sale calculating entire sale price as gain

[PCF]

I used a new vehicle for a small percentage of its mileage for my rental property, so I took the standard mileage deduction.  I have now sold the vehicle (traded it in) and TurboTax is calculating the entire sale price as a gain:

Business portion of purchase price        1,703

Depreciation portion of mileage                215

Adjusted Basis                                            1,488

Business portion of sale price                    597

Loss                                                                 891

TurboTax says my gain was 597.  I calculate a loss of 891.  Can anyone explain this?

Thanks!

[ThomasM125]

TurboTax was not looking for the exact numbers that you entered.

TurboTax will take the purchase price you entered and multiply it by the business use percentage to arrive at the cost basis.

So, you should enter the full cost of the vehicle on the screen that asks for the basis for gain/loss. Also, any business miles entered in the current year will be factored into the prior depreciation equivalent you entered of $215 apparently, so that will further reduce the basis resulting in a larger gain on sale:

So, try it again and list the full cost of the vehicle for the basis and total and business miles driven in the current year. TurboTax will multiply the basis by the business miles/total miles, subtract the prior and current year depreciation equivalents, net that with the sales amount and that should give you the correct gain or loss on sale.

[AmeliesUncle · Accepted solution]

If the business percentage of the vehicle varied from year to year, don't enter the sale in the vehicle section (say it was converted to personal use).  Then enter the manually calculated numbers in the "Sale of Business Property" section.

[PCF]

ThomasM125, thank you very much for your help!  After taking your advice and then reviewing the results in form view, I now understand the program takes the full purchase price and multiplies it by the percentage of business use to establish the basis.  (It then subtracts that basis from the business portion of the sale price plus the amounts depreciated through the standard mileage deduction each year of use to arrive at the gain/loss.)  My only remaining problem is that my business use percentage varied from year to year and while I used that average to arrive at the business portion of the sale price, the program used the 2024 business percentage to arrive at the basis.  Now I have inconsistent percentages.  Is there any way to use the overall average percentage instead as it is more accurate (and beneficial)?

[AmeliesUncle]

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@PCF wrote:

My only remaining problem is that my business use percentage varied from year to year and while I used that average to arrive at the business portion of the sale price, the program used the 2024 business percentage to arrive at the basis.  Now I have inconsistent percentages.  Is there any way to use the overall average percentage instead as it is more accurate (and beneficial)?

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I already answered that above.

[PCF]

AmeliesUncle, I apologize for not seeing your reply.  I had already taken the other advice given and was following up on it.  Following your advice, I see that by inserting the figures for only the business portion of the vehicle, I can get the correct answer.  I had a question doing it this way about a 4797 loss in 2019 from a previous vehicle sale, but when I went back to review it to give you my exact concern, it looks like TurboTax checked the appropriate boxes and addressed it behind the scenes.  Thanks again.  I appreciate your patience!  Your advice solved my problem.

[AmNat]

I don't understand this response because when you click on gain or loss basis link while on that question it specifically tells you to take your original purchase price... and subtract any depreciation that was allowed or allowable (look at your past tax returns for this).

Also, nowhere did it ask me to put the original purchase price. The prior question simply asks you to put The sales price and expense of sale. 

I amjust still teying to get this right based on how the questions are asked on TT.  I get how it's calculated but the way that it's asked here makes me concerned that it will not be appropriately added to the forms.

[PCF]

AmNat,

Hm.  Let’s make sure we’re in the same place.  If I follow AmeliesUncle’s advice and go into:

Wages and Income

Choose Sale of Business Property under the Business Items section

Checkmark the top 3 boxes for sale of property not already reported and about recapture

I then answered no to a list of criteria because I had a loss

Then I enter I held the asset longer than one year and get to a screen that asks for:

Description

Date Acquired

Date Sold

Gross Sales Price

Cost Basis

Depreciation Taken

If you click on the Cost Basis help link, it specifically tells you: “Enter here the basis of property without deducting depreciation.”  This is where you enter the purchase price.

If you use just the business portion of the sale, cost, and depreciation, you should get the right answer.