I've read many help posts about vehicles being traded in that are used solely of business purposes, but several TurboTax pages are confusing me since we used our trade-in about 20% of the time for business purposes.
So...scenario with hypothetical names/numbers so my brain doesn't explode.
Bought a truck (henceforth named Bob) in 2014 for $20,000
Used for business 20% of the time.
I have kept track of business mileage for Bob since we bought him.
We have always taken the standard mileage deduction.
Traded Bob in for new truck (henceforth named Steve) in 2022.
Steve cost $30,000
Dealer gave us $1500 for Bob.
Steve now costs $28,500
Steve will be used for business 20% of the time.
On TurboTax, after reporting that Bob was no longer in use, entering the estimated mileage, and confirming we again wanted to take the standard mileage deduction, the next few pages defied logical reasoning. Please help. 🙂
Questions...
On the TurboTax page that says Sales Price.
1. I assume that the sales price would not be Bob's trade in value of $1500, but the business portion, (20% of $1500 or $300). Correct?
2. Since Bob was a trade in, and we didn't buy any yard signs advertising Bob, I assume our expense of sale would be $0. Correct?
On the TurboTax page that says Vehicle Cost.
3. Would this be the price of Bob when we bought him ($20,000) or the business percentage (20% of $20,000 = $4000) or the current, fair, Blue Book value of Bob today?
On the TurboTax page that says gain or loss basis.
4. Basis for gain/loss, basis for AMT gain/loss... I got nothing. Bob's original purchase price + "any major improvements" (nothing major) and minus "any depreciation that was allowed or allowable". Like, mileage? Isn't that on the next page?
On the TurboTax page that says Calculate Depreciation Equivalent
5. Is this where we do some crazy math? 2021 Bob business mileage was 1000 x $.26 and 2020 Bob business mileage was 1000 x $.27, etc.? If so, let's say all the mileage x cents added up equals 2000. Would this be the prior depreciation equivalent? Would it be Bob's purchase price of $20,000 minus the 2000? Would it be the "business percent" of Bob's purchase price (20% of $20,000 = $4000 then subtract the 2000? How does the AMT depreciation equivalent differ?
Okay, that last one was actually several questions, but from what I've been reading, it seems like this section is giving a lot of people grief. Thanks for listening about Bob and Steve. We look forward to hearing from you. 🙂
