Putting it all together, your car has a basis of zero and sold for $100. You have a $100 gain. Here is how:
Purchase: Business part of car would be 20% of original cost =$500
Depreciation: $500
depreciation taken for business use $1600 = business use depreciation using standard mileage is limited to zero and does not go negative per IRS Publication 463 (Page 35) Car Expenses:
You must reduce your basis in your car (but not below zero) by the amount of this depreciation. If your basis is reduced to zero (but not below zero) through the use of the standard mileage rate, and you continue to use your car for business, no adjustment (reduction) to the standard mileage rate is necessary. Use the full standard mileage rate (65.5 cents ($0.655) per mile from January 1–December 31 for 2023) for business miles driven.
Sale: sold car for $400 times 20% is $100 sales price
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