Business & farm

The steps to calculate the sales price, cost basis and gain or loss are shown below for the station wagon.

A trade-in of a business vehicle is now a sale for tax purposes. This began with the Tax Cuts and Jobs Act (TCJA) starting in 2018. The trade-in value of the business vehicle is the selling price and has no affect on the cost of the vehicle purchased to replace it.

1. Minivan-Sold in 2012: Sold for $1,500 (trade value) and sales price if it had been used 100% for business use. However, you would use the total miles on the Minivan at the time of the trade, then calculate the business miles over the years.  
   • Business miles divided by total miles gives the business use percentage for the life of the vehicle.
   •  Multiply this by the sales price and the cost basis less standard mileage rate (SMR) depreciation portion to arrive at gain or loss.
     • Sales price minus cost basis minus depreciation ($243) = taxable gain or loss (business portion only)
2. Station Wagon: Purchase price $20,016 (assumes no trade-in used to calculate) - Sold in 2024 for $600 - follow the same steps above to arrive at the business sales price, cost, depreciation ($649)  to arrive at business gain or loss.
3. SUV: Purchase price $44,800  (assumes no trade-in used to calculate) - Current vehicle for use in rental property.

In the rental activity be sure to select your vehicle was converted to personal use. Follow the steps below to enter your sale.

Total all of the business miles for the life of the vehicle

1. Total all miles on the vehicle for the life of the vehicle
2. Business miles divided by total miles = Business Use Percentage for the life of the vehicle
3. Take the original cost of the vehicle x the business use percentage = Business Cost
4. Take the sales or trade-in price x the business use percentage = Business Sales Price
5. Calculate all of the business miles by year with the rate in the SMR for depreciation (chart attached) to arrive at the total depreciation considered used by the IRS.

Next enter your Sale of Business Property

1. Income at the top
2. Scroll down to Other Business Situations
3. Select Sale of Business Property
4. Select Sales of business or rental property that you haven't already reported.
5. Answer 'Yes' to Do all of the following apply...?
6. Enter your sales information.
   1.  Description of the Property (Vehicle made/model/year)
   2. Sales Price/Sales Expenses 
   3. Date acquired and date sold
   4. Sales Price
   5. Cost
   6. Depreciation (it looks like you already know how to do this but for your convenience here is the SMR portion of depreciation