Self employed

Yes, you will need to dispose of your business vehicle since it is no longer in service. After this is reported, there may be a gain or loss on the business portion of your vehicle.  Please follow these steps for an accurate reporting.

1. Navigate to the Business section of your return and first page is the Your 2021 self-employed work summary. Select review next to your business listed.
2. On the next page, scroll to expenses>vehicle>edit
3. Select your vehicle in the Vehicle summary. select edit
4. As you check the information in the next screen, you will need to check the box that says I stopped using this vehicle in 2021. Then enter the date that you stopped using it.
5. When you reach the page where it asks if you used this for personal use, you will say yes, and check one of the boxes that ask if you had another vehicle for personal use.
6. Then in mileage, you will indicate how much of that mileage was used for your business.
7. Then finish out the mileage section and continue until you get to a screen that says Do Any of These Apply to the XXX. If the percentage of your business use varied throughout years you used it, then you will check this box. 
8. If it asks if you converted this to non-business use, say no.
9. NOW it asks for the sales price.  Here you will put in the insurance reimbursement for the loss as a sales price. Before you record this amount, you will need to determine a business percentage of use throughout the years you have used this because Turbo Tax does not calculate this. So if you used the vehicle 50% of the time in say 2017, then you take the full mileage in 2017 and multiply it by the business percentage of use. You will do this for every year you used the vehicle for business. Once you have a total for all of the years, you will add this up and record the amount where it asks for the sales price.
10. Next you will record the cost of the vehicle when you purchased it. Use the same method of percentage use that I have mentioned above.
11. If you don't adjust your insurance reimbursement and cost basis by business percentage use, it will determine a full gain or loss on the vehicle and this would be incorrect. If it is a gain, your taxation on this will be much higher after the depreciation recapture takes place, which is described in the next step.
12. Continue until you get to the depreciation equivalent.  If you have claimed mileage then you will need to get the business mileage you claimed in previous years.  For each of the years, you need to multiply the mileage by the mileage equivalent for that year. The mileage equivalent table is in the learn more tab.
13. You will total up all the years you claimed business mileage and record that amount in Prior Depreciation Equivalent.
14. After listing these amounts,  the program will either report a gain or sale on the vehicle.