Vehicles used mostly for business...

[orange0267]

Hi.

I'm using TT for business for the first time and working on my 2022 taxes.   In March of 2022, I bought a vehicle which I'd been leasing since Sept 2018 at lease end.  I then traded it in for a new vehicle (also used for business) in July.  The new vehicle was purchased for cash balance net of trade-in.  The new 2022 vehicle is fine.  It's expensed and depreciated correctly.  However, I'm having problems listing the 2018 vehicle sale as the TT program seems to have gaps regarding ownership vs. leasing.  Even though I'm inputting accurately the program seems to be both depreciating AND giving me a $10,000 loss on sale of a business asset.  I believe this is due to the faulty questions of the program, which don't seem to acknowledge/encompass my particular situation; leasing (and deducting the business portion of the lease in prior years, then buying off the lease, and then selling).  The root of the problem (I think) lies in the calculated adjusted cost basis of the vehicle.  It asks me for prior depreciation or amt depreciation but there is none as the vehicle was never owned (only leased) until March of '22.  Do I need to figure out the amount of my prior lease payments deducted from Sept '18 to March'22 and then subtract that amount from the original 2018 gross price to get an accurate cost basis?  These lease payments deducted are like equivalent depreciation right?  While there may be still be a loss I doubt it will be $10,000.  I guess my question is:  how do I calculate the adjusted cost basis of this vehicle?  Thanks.

[Anonymous_ · Accepted solution]

See https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses...

You may want to clarify the type of business structure you have, such as a sole proprietorship/single-member LLC, multi-member LLC (the LLCs with or without an election to be treated as a corporation). You stated that you are using "TT for business" which is ambiguous. Are you using TurboTax Business or another product? TurboTax Business is strictly for the preparation of income tax returns for entities.

Also, note that your entire lease payment is not deductible if there was personal use so you might want to state whether you, in fact, deducted the entire payment on your prior returns. Moreover, the entire lease payments are not the equivalent of depreciation (although that would be a component thereof).