@Grimes_MG wrote:
What about if you still had a loan on the car that was totaled? My car was deemed "totaled" and I received a settlement from the party-at-fault's insurance company. I then took the settlement and payed the remaining loan amount which left me a little less than 1/4 of the total amount. I then took that 1/4 and bought a used car for my business. How do I report that instance? Do I only report the 1/4 amount since I really didn't realize the entire payoff since I owed money to the bank?
No, your sales price is what the insurance company paid for the car, it's value, even if the money was paid to the lien holder. Just as if you had sold the car in good condition to a buyer, you report the sales price. The fact that you owed on the loan doesn't change the business calculation.
