TurboTax can't figure Depreciation Recapture nor capital Gain on a Business vehicle with variable business use.
You used the Standard Mileage Rate. The Standard Mileage Rate has a Depreciation Equivalent build in.
Multiply the business miles each year by the depreciation equivalent of that year.
Let's say the total is 2,000.
What was the basis of the vehicle when put into service? Probable the fair Market Value at that time, so let's say 20,000.
Now figure your "Adjusted Basis" which is the basis less depreciation, so 20,000 - 2,000 = 18,000.
If the trade-in is more than the adjusted basis, you have depreciation recapture, which is treated as Ordinary Income, taxes at your tax rate.
So if the trade-in value was 19,000, you have 1,000 depreciation recapture.
If the trade-in was 18,000 or less, no depreciation recapture.
What about Capital Gain or Loss?
You would report a gain or loss by the percentage it was business.
Say the business use averaged 4%, 4% of a loss could be reported. (The personal loss is not allowed)
If there is a gain, all the gain is reported since gain on personal property IS taxed.
Chances are the trade-in was a wash, but used cars are getting some pretty good value.
When you enter the new vehicle, include the trade-in as part of the cost.
2023 0.28
2022 0.26
2021 0.26
2020 0.27
2019 0.26
(You might want to tell the schedule C the vehicle was converted to personal use to get it off the books, THEN if you need to recapture depreciation, report a gain or loss, do it under "Sale of business property" using numbers that gets the correct numbers on the return)
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