Did you trade the car in for a different one?
If so, then you must adjust the adjusted basis by the amount of depreciation allowed or allowable.
If a vehicle used for business is sold, the portion of any gain that represents depreciation allowed or allowable, including the Sec-tion 179 expense and the special depreciation allowance, is recap-tured as ordinary income. The amount recaptured is the lesser of the gain from the sale or the depreciation allowed or allowable
Depreciation component of standard mileage rate.
For computing the taxpayer’s basis in an automobile, the standard mile-age rate has a component that represents depreciation.
For 2020, the depreciation component is 27¢ per mile. If the actual expense method is used in any year after the standard mileage rate method has been used, the straight-line method of depreciation must be used. (Rev. Proc. 2004-64)
Depreciation Component of the Standard Mileage RateYear.....................2020..........2019..........2018..........2017..........2016
Rate per mile.................27¢..........26¢............25¢............25¢............24¢
Note: These rates do not apply for any year in which the actual expenses method was used.
Depreciation beyond zero. The taxpayer must reduce the basis of an automobile by the depreciation component of the standard mileage rate, but the basis cannot go below zero.
If the depreciation component of the standard mileage rate exceeds the adjusted basis of the automobile, the automobile is considered fully depreciated, but this does not prevent the taxpayer from continuing to claim the full amount of the standard mileage rate.
The depreciation component is used only to compute gain or loss if the vehicle is sold or computing depreciation when switching from the standard mileage rate to the actual expenses method
