Disposition of vehicle used for rental property
I have 2 rental properties and have been taking the standard mileage deduction each year for both properties. The car was 100$ owned by me and I used for both personal and business (rental) use with personal use being the majority. I sold the car in December 2025 and am trying to record the sale (actually a trade in but TT doesn't recognize this so just treating as sale). I have all my calculations needed to determine the prior depreciation. My understanding is when taking the standard mileage deduction only and not using actual expenses, there should not be any MCARS depreciation. Based on my manual calculations taking what I paid for the car and subtracting the allowed deprecation (based on the miles reported each year times the depreciation rate for each year) to get an Adjusted Basis. I then took the trade-in value and subtract the adjusted basis which gives me a loss. However, when I answer the questions in TurboTax, it shows a gain instead of loss which I know if not right.
I entered in the trade-in amount for Sales Price, left expense of sale blank, I entered the price I paid for the Vehicle Cost. I didn't use for business right away but still used purchase price as I have no way of knowing what the FMV was at the time it was placed into service. Also each rental started at different times so they have different in service dates for each property for the same car. The next screen is gain or loss basis and the same purchase price amount is entered in each box (2nd box is AMT). Next section is Calculate Depreciation Equivalent and here I entered the total of miles reported each year x rate each year to get total prior depreciation (not counting 2025). All this results in a gain which should be a loss. What am I doing wrong?
When I look at the forms I see a Disposition Report which has the correct trade in value in column d but has values in columns e & f I do not recognize or can see how they were calculated. Then columns h & i show the gain and reference Form 4797 pt III. When I look at this form the issue seems to lie with line 21 cost or other basis plus expense of sale. The number here is not anything I entered when answering the questions. LIne 22 depreciation allowed or allowable is also a different number from what I entered. There are values in Section 1245 property, not sure what this is?
I also took a look at the car & truck worksheet and I see a small value in Part VI line 35 Depreciation and Section 179 limit for luxury cars. I have never claimed any expenses on the car, always used the standard mileage deduction. I tried to adjust this form and was able to get this depreciation go away but then it turned the amounts for lines 37 and 39 red for Prior Depreciation and Prior AMT depreciation. I cannot fix this.
Please advise if I answered a question incorrectly, am missing something, or if there is a way for me to fix this in a form. I never accounted for the percentage of use of the vehicle for business use as I figured TT would figure that out based on the miles I had entered (Total miles and business use miles).
