A significant part of what you have posted is beyond the scope of the type of advice we can provide. However, if you decide to sell your vehicle to your contractor, you report the sale of the vehicle on Form 4797, the Sales of Business Property form. The form features multiple sections, and each section addresses a different type of asset. Part III is the correct portion of the form if you sold a business vehicle, which is considered a property asset. This portion of Form 4797 allows you to report the sale of depreciable personal property, which is referred to as 1245 property. When you log back into your TurboTax account, you can enter information about the sale of the your vehicle in the section Wages & Income. Scroll down to the Sale of Business Property and answer the questions accordingly.
Regarding the sale, you must calculate the tax adjusted basis for the vehicle during the sales process. The adjusted tax basis is the value of the vehicle after depreciation. This value is based on the original cost of purchasing the vehicle minus allowable annual depreciation.
If the contractor were your employee, be advised that if you sell a vehicle to an employee for substantially less than market value, the difference is taxable income and must be treated as imputed income on the employee's W-2.
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