After I used the truck for personal and business use for 16 years, the aggregate depreciation I took exceeded the business portion (32%) of the original cost. I thought that excess depreciation is taxable as ordinary income, as well as the sale price; however, I get an error message during the federal review saying that Line 22 can't exceed Line 21. Form 4797:
Line 20. 2,905 gross sales price
Line 21. 9,741 cost or other basis
Line 22. 11,516 depreciation allowed or allowable
Line 23. <1,775 > adjusted basis
Line 24. 4,680 total gain
Since I fully depreciated the truck, it would seem to make sense that the recapture would apply to the excess depreciation plus the sale price ($4,680 total). I'm not seeing the error.
