RobertB4444
Expert Alumni

Deductions & credits

As you use a vehicle and take a tax deduction for depreciation on it the IRS gives you a tax credit.  When you sell that vehicle they require you to pay that credit back with the proceeds from the sale.  In your case you didn't really sell it but you were paid for it all the same so the IRS requires that you pay taxes on the portion of the proceeds that represents the depreciation deduction that you already took.

 

@rabette 

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