So are you saying if I take the standard mileage deduction then I don't have to manually enter details about the asset on the car and truck worksheet? And I don't need a 4562 on the new used car we bought?
Nope, not saying that at all. The disposition of the old car will still be on either the 4797 or SCH D, and possibly both. But since there is no change on the 4562 mathematically, there's no need for it. The IRS doesn't want it. A car listed on the 4562 showing zero depreciation (as it should) and then later removed from the 4562 does not change the total depreciation on that 4562. Since there's no change in the total depreciation taken, including it is a moot point. Send it, and the IRS will just delete it or shred it.
What I would do with a car that has no trade in value (a 17 year old car really doesn't, unless you sell it for scrap) is just show it as "sold or otherwise disposed of". Then on the "special handling required" screen select YES to indicate that I threw it away in the garbage and be done with it. This would alleviate the need for depreciation recapture.
Then show the acquisition of the new car. If the dealer gave me anything for the old car, (which in your case they did not - the dealer just fudged the numbers for *THEM*, not you) then I would just add that amount to the purchase price of the new car.
Take what you actually paid out of your pocket in cold, hard cash. (this includes any loan amount from a lender as shown on the loan documents) and compare it to the bottom line price on your receipt from the dealer. If the receipt amount is higher, then the difference was your trade-in value which you'll just add to the cash you paid. (cash includes amounts borrowed from a lender in this case)
In other words, the dealer's receipt plus any fudged trade-in value is what you paid for the car.(assuming that receipt does not include the trade-in value of the car. It very well could.)
Overall, you're making this more difficult for yourself than it really is. That old car is a 17 year old piece of junk. Treat it accordingly and give it no more attention that you would the garbage can in your kitchen. 🙂
