depreciation

Forum|Forum|5 years ago
April 6, 2021
2 replies
50 views

I purchase a vehicle for my business 07/10/2008 for 45681.99. It was put into service 0n 7/10/2008. The CPO vehicle already had 35,000 miles and 199,344 miles when it was traded for $4000. Some of the questions are unclear to me when I selected "remove the vehicle from service".

Over the years I used standard mileage deduction, not actual expense. What info and calculations do I need to remove the car from service? TT is asking to calculate gain/loss, depreciation equivalent.

TurboTax Self Employed Online

Cynthiad66

Level 14

When you stop using a vehicle for business, a portion of the deduction for depreciation, can be recaptured as income. However, this only applies if you have a gain and usually you will have a loss when you stop using or sell a vehicle.

In TurboTax, you'll select sold or disposed of to report that you no longer use the vehicle for business. If you didn't sell it, then put "$0" for the sale price. You can return to the vehicle to Edit it or Delete it using the following steps:

Log into the software and select the blue button Take me to my return
Select Federal from the left side bar
Then select Income & Expenses from the categories along the top of the software
Scroll down and select Edit next to Self-Employment
Next select Edit next to the self-employed business
Click Continue through the informational summary screens
On the Income and Expenses summary screen, scroll down under Expenses and click Edit/Review next to Vehicle
You'll come to a summary screen of the vehicles you've entered, click Edit or Delete next to the vehicle
If you edit, you'll be able to review your answers about your vehicle. On the first screen, at the bottom of the page, you'll see a check box for I stopped using this vehicle in 2017 Per @AmandaR1

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Mike9241

Level 15

one thing not mentioned by the expert is that the standard mileage rate contains a depreciation amount.

to determine gain or loss first you must split the cost of the vehicle into two parts. the business part is based on business mileage to total mileage. that factor times the cost is the business portion. the est is your business portion. you would also split the trade-in value the same way (that's your sales proceeds). personal portion of sales proceeds less personal portion of the cost is your personal gain or loss. loss is not deductible. gain is taxable as a long-term capital gain. the business portion of the cost must be reduced by the applicable depreciation. the depreciation rate included in the standard mileage rate time business miles for each year. the rates are in IRS pub 463 page 24 an example is given. https://www.irs.gov/pub/irs-pdf/p463.pdf

now you likely have a taxable gain or loss on the business portion = business portion of sales proceeds less (the business portion of cost reduced by the depreciation)

Mike9241