Move autos from one schedule C to another schedule C on my 1040

[CliffG]

I have 2 schedule c in my 2023 1040, one for my wife, one for me. Both realtors. Our 2 cars are associated with my wife schedule C. I became a schedule c several years after she that is why cars are on her schedule c. She passed last year. How do I get the cars onto my schedule c. Both cars are fully depreciated on her schedule c. One is 2013 another 2018. I do not want to use per milage on my schedule. thanks

[K M W]

Hi, CliffG!

To get the vehicles on your schedule C, you would have to add them manually. There is not a way to "move" a vehicle detail from one Schedule C to a different Schedule C automatically through the system.

Once you add them to the Schedule C for your business, you would be able to go through the data entry and specify whether you want to take actual expenses or standard mileage.  To use the standard mileage rate for an automobile owned by the taxpayer, the standard mileage rate must be used in the first year the auto is available for use in the taxpayer's business.  In subsequent years you can choose to use either the standard mileage rate or actual expenses. The choice to use the standard mileage rate must be made by the due date of the return, including extensions.

If you choose to use actual expenses in the first year, you must use actual expenses for all subsequent years.

[CliffG]

how do i handle, date placed in service and initial cost. I do not want to restart the depreciation. also do i need to be concerned about value of a business asset that disappears from my wife schedule c. thanks

[K M W]

Great follow up questions!  

So, the date placed in service on the first schedule C is irrelevant on YOUR Schedule C - you certainly can have a vehicle that is used in more than one business at the same time.  For your business, you should have reported the vehicle for the first time in the tax year that you started using that vehicle for your business - regardless of if/when it was used in a different business.  So for your schedule C, you would report the date in service as the first date that you used that vehicle for your business.

As for what amount you enter as the value, that is a little trickier. Normally your basis in a car for figuring depreciation is generally its cost.  However, in some situations, you will use your adjusted basis (your basis reduced by depreciation allowed or allowable in earlier years). If you change a car from personal use to business use, your basis for depreciation is the lesser of the fair market value or your adjusted basis in the car on the date of conversion.

In your situation, you would calculate the vehicle's adjusted basis when it was placed in service in your business.  Assuming you started using the vehicle after it was fully depreciated, your basis would be $0.

Finally, with respect to your wife's schedule C - you will want to stop depreciating the vehicle there as it is no longer used in that business.  There is no transaction to report currently as you still own the vehicle; but in the year the vehicle is sold or disposed of, you will record a gain (or loss) on the disposition of the vehicle. In your situation, it should be a gain, as you indicated the vehicle was fully depreciated, so your adjusted basis in the vehicle would be $0.

[CliffG]

Thanks, I am understanding, date placed in service would be the date of my wife’s death, value would be $0.  I do and have owned the autos, I do not need to file any disposition of business assets of my wife’s schedule C. Also, since there is no income, or expenses associated with my wife’s schedule C. I will no longer include that schedule C as part of the 1040.

Are these statements correct?

Thank you for you help.

[K M W · Accepted solution]

Correct, if the vehicles became business assets of your business on the date your wife passed, then that would be the date you enter on your Schedule C, with an an adjusted cost basis of $0 as the vehicle was fully depreciated.

If your spouse's Schedule C had no activity in 2024, you would NOT include that Schedule C in your tax return for 2024.

Just remember that when the vehicle is disposed of, you will have to record the taxable gain on your tax return, since they were fully depreciated.