@nebirah wrote:
It made sense to me, but glad to share if you think I can get a higher tax refund:
2017: 87.2% business miles
2018: 85.8% business miles
2019: 86% business miles
2020: 69.3% business miles
Approximately $24,000.
It doesn't matter if your refund is better or not, you need to report it correctly. 😁
For simplicity, I am going to say 80% business use during that time period. But because the totals miles vary from year to year, you would need to figure out an exact average based on total miles during that time period and business miles during that time period.
It involves a multi-step calculation:
Calculation to determine if there is a LOSS (based on FMV when converted to business use):
$9726 x 80% = $7781 business Basis
Depreciation taken $21,777
Depreciation is limited to Basis, so you use $7781.
Basis of $7781 minus depreciation of $7781 = $0 Adjusted Business Basis.
Sales price = $1500 x 80% = $1200.
Adjusted Basis of $0 and sales price of $1200, does NOT show a loss. That means this calculation does not apply and we need to do the next calculation.
Calculation to determine if there is GAIN (which is based on purchase price):
$24,000 x 45% = $10,800 business Basis.
Depreciation = $21,777
Depreciation is limited to Basis, so you use $10,800.
Basis of $10,800 minus depreciation of $10,800 = $0 Adjusted Business Basis.
Sales price = $1500 x 45% = $675.
Adjusted Basis of $0 and sales price of $675 shows a gain, so this is the calculation you use.
So you enter $10,800 for the cost, $10,800 for the depreciation and $675 for the sale price. It will show a $675 gain.
