This is a requirement from the IRS that depreciation can be taken if the asset is used 50% or more for business.
Since this vehicle has never been used at least 50% then the recapture will need to be done, and TurboTax will walk you through this.
- Sign into TurboTax Home & Business
- Click on Business tab then Continue
- Click on I'll choose what I work on
- Click on Business Income and Expenses Start/Update button
- Click on Edit your business
- Click on Business Assets Start button
- Click Yes on Any Large Purchases
- Go through 3 screens until Describe This Asset - Click on Intangibles, Other property and Continue
- Tell Us a Little More - click on Other asset type
- Continue going through interview and you will need to know how you depreciated the vehicle since 2012
Here is the recapture rule:In certain cases, when the IRS allows you to take a large business deduction for a vehicle in a previous year, it wants some of that money back, if it looks like you are using the vehicle less and less for business.
This is called the recapture rule. The IRS is recapturing "excess" depreciation.
If you are sure that you drove this vehicle for business 50% or less this year, you will have to adjust your 2017 income to comply with this rule.
For example:
You bought a car for $20,000 in 2008 and deducted the accelerated depreciation amount of $15,510. Under straight-line depreciation, you would have been entitled to a deduction of $13,000 over the same period.
You must add the difference of $2510 ($15,510 - $13,000 = $2510) to this year's income.
Similarly, if you took a Section 179 depreciation deduction the year that you bought the vehicle and started your business, you will have to enter recapture income this year.
Follow the steps on the screen and we'll help you.
