It is complicated. You didn't say how much the depreciation was (from the Standard Mileage Rate) or what the Fair Market Value (FMV) of the vehicle was when it was converted to business use, so let's hypothetically say it was $450 of depreciation and a FMV of $10,000.
You start the calculations based on the purchase.
- 1,558/74,429 = 2.1% (for this example, I'll keep using the rounded 2.1%)
- $17,000 x 2.1% = $357 (purchase price of business portion of vehicle)
- $357 minus $450 of depreciation ... but Basis can't be below zero, so Adjusted Basis is $0
- $8,000 x 2.1% = $168
- Adjusted Basis of $0 with a Sale Price of $168 = $168 of gain.
- It is a gain, so we can stop the calculation there (see next bullet point if it was a loss). Use $357 Purchase Price, $357 of Depreciation, and a Sales Price of $168.
- If that calculation had ended in a loss, then we would redo the calculations using the information from 2023 (FMV, miles since converted to business, etc.). But that doesn't apply to your scenario.
