Here's how to report sale of old car and purchase of new car for personal and 5% business use:
Step 1: Determine if you have a Gain.
- Using your original cost and the total miles since you bought the vehicle, determine the business percentage.
- Apply that business percentage to the purchase price and selling price. Use ALL depreciation.
- Is there a gain? If not, go to Step 2.
Step 2: Determine if you have a deductible Loss.
- Using the Fair Market Value when it was converted to business use and the total miles since you started using it for business, determine the business percentage.
- Apply that business percentage to the purchase price and selling price. Use ALL depreciation.
- Is there a gain? If not, go to Step 3.
Step 3: You don't have a Gain or a deductible Loss. Just tell the program you converted the vehicle to personal use, and that is all you need to do.
Regarding the 5% business use of then new car, you can refer to this TurboTax article for information about how to deduct it.
