You cannot deduct the $1,200 on your return. Local fines and penalties are deductible only to the extent they don't arise from a violation of any law. Your car was towed because it violated local law statutes. You cannot claim the impound fee as an expense of sale.
Because you only used the vehicle 1/10 of the time for business, only 1/10 of the sale income should be used to calculate the gain (loss) on the sale of the vehicle.
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