A few comments:
- Assuming your wording "converting to personal use next year" means 2022. See bullet #8.
- You state that the vehicle was purchased in 2017. That means that 1/2 year depreciation was taken in 2017 (half-year convention).
- You then took a full year depreciation in 2018, 2019, 2020 and 2021.
- For a 5-year depreciable vehicle, that means in 2022 you are still in the recovery period for the vehicle (still have 1/2 year depreciation remaining).
- Since you are still in the recovery period in 2022, if the vehicle use drops to 50% or less, you will have immediate depreciation recapture.
- You will need to determine the "excess" depreciation allowed and report that as ordinary income (form 4797) and this amount will be subject to SE tax (assuming SE tax is applicable). See Publication 946 page 56 for help in this area.
- Your basis of the vehicle is also adjusted as a result of the depreciation recapture.
- If you are able to defer the drop in business use of the vehicle until 2023, then you would not have immediate depreciation recapture (just deferred).
- A vehicle is listed property
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
