"1. Do I need to go through this recapture depreciation for this vehicle even though I never take any section 179 depreciation for it ? If no, do I need to check off the "section 179 recapture" check mark in the "Any Other Property Sale ?" questionnaire ?"
No, since you gave the vehicle to your daughter and you did not take either bonus depreciation nor Section 179, you would not have bonus depreciation to recapture.
If there s a checkmark selecting "A recapture of previous section 179" and you did not use that deduction, unselect (uncheck) that box and continue.
"2. If yes, how do I compute the amount using the straight-line depreciation method ? Would you please provide an example ?"
No need in your case; however, even if you used the standard mileage rate, you were claiming depreciation. Depreciation is built into the standard rate. The amount attributed to depreciation is determined each tax year. You would need to go through the yearly mileage claimed, determine the amount attributed to depreciation and add them up.
This amount of depreciation is then retained by the vehicle meaning when it is sold, it MAY need to be claimed at that time.
In your case, since you gave it to your daughter, and you claimed no bonus deduction or section 179, you would have no recapture to report.
When you daughter sell the vehicle, SHE MAY need to recapture the depreciation at that time.
It would be figured the same way as if you sold it this year, however the personal and business use will need to be adjusted to account for the additional time she will have used it.
"Adjusted basis for depreciation" would be the basis when put into service less the depreciation claimed.
Subtract this adjusted basis from the sales proceeds.
If there is a gain, the gain attributed to the depreciation would be the amount to recapture, however the amount to report would be further reduced by the percentage of business use.
Example:
You used the vehicle 50% business for four years and used the standard mileage rate which resulted in $1,000 depreciation.
The vehicle was worth 15,000 when you started using it.
You give the vehicle to your daughter.
No loss, no gain, no recapture, no reportable income.
Your daughter sells it after using for two years for 15,000.
Your daughter would need to recapture the 1,000 depreciation, but that would be reduced to only 30% to account for the two years of her personal use.
If your daughter sells it for less than the adjusted basis of $14,000, there would be no reporting.
@ryanbach1028
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