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Business & farm
It depends. If you didn't use the standard mileage rate (SMR) the first year you placed your vehicle in service, then you were never allowed to use it for that vehicle. This rule has been in effect for many years and continues. The steps below will allow you to complete the business portion of the sale and it's likely nothing to do with the personal portion because a loss is not allowed. These steps will eliminate manual entry.
It seems you know the depreciation you used on the vehicle for business purposes ($13,017). If you still have the vehicle in your tax return use the following steps to remove it for future years. If it is not currently in your tax return, gather the necessary business use figures and then go directly to the Sale of Business Property.
The way to report the sale (trade is not really recognized by the IRS any longer for equipment or vehicles) is as follows. You have all the records so it should provide you the detail to move forward.
- All business miles for all years and then total miles for all years - divide business miles by total miles to arrive at your overall business use percentage for the life of the vehicle. You will use this percentage times the selling price (or trade-in value) to arrive at the business selling price. Use the same percentage to arrive at your business portion of the cost before depreciation.
- If you used the standard mileage rate (SMR) each year, then a portion of that rate represents depreciation. See the chart below to arrive at the depreciation portion for the business miles only. If you used actual expenses, add all of the depreciation used to the date of sale (should be in your return or use the figure you have noted).
- When you go through the vehicle information in your rental be sure to select 'Sold, disposed of, etc....' then do not indicate it was sold. You must say 'Yes' it was converted to personal use. This will eliminate any sales information in the vehicle it self.
Next enter your Sale of Business Property (do not enter any sales information in the vehicle asset)
- Income at the top
- Scroll down to Other Business Situations
- Select Sale of Business Property
- Select Sales of business or rental property that you haven't already reported.
- Answer 'Yes' to Do all of the following apply...?
- Enter your sales information, do not make an entry for depreciation (no zeros)
- Description of the Property (Vehicle made/model/year)
- Sales Price/Sales Expenses
- Date acquired and date sold
- Cost
- Depreciation
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