topic How is depreciation allowed calculated for the disposition of a vehicle partially used for business? Sch. C - Car Expenses Worksheet - lines 51-52. in Business & farm

How is depreciation allowed calculated for the disposition of a vehicle partially used for business? Sch. C - Car Expenses Worksheet - lines 51-52.

kpkase — Tue, 04 Jun 2019 19:51:37 GMT

I am getting an error (that I cannot override) saying my "depreciation allowed is too high", but I cannot find how that is calculated, or how it is changed/corrected.

If you had a lower-cost vehicle when you first set it up...

MarilynG — Sat, 21 Mar 2020 02:49:34 GMT

If you had a lower-cost vehicle when you first set it up for Business, and used several years (or had many business miles) your accumulated depreciation might be more than the original cost of the vehicle, so TurboTax gives you an error.

If you think that is the case, report the Original Cost you entered for your Vehicle as both Depreciation and AMT Depreciation amounts. In FORMS mode, you can type the amount right on the Vehicle Expense Worksheet.

Depreciation is calculated differently, depending on whether you claimed Standard Mileage or Actual Expenses.

If you claimed Standard Mileage expense for your Business Vehicle each year, part of that deduction is the 'depreciation equivalent' (22 cents of the 55 cents per mile deduction, for example).

You would multiply the number of Business Miles each year times the Depreciation Equivalent for that year. Again, the depreciation can't exceed the Cost of the Vehicle when you originally started using it for business.

If you claimed Actual Expenses for your business vehicle each year, the Form 4562 Depreciation Schedule on last year's return will show Accumulated Depreciation.

[Edited 03/20/2020 | 7:49 PM]

Re: If you had a lower-cost vehicle when you first set it up...

MartinS1 — Fri, 11 Oct 2019 03:54:50 GMT

I'm sorry, but I don't understand the suggested fix for this problem.

I have the same problem described in this post "Depreciation allowed or allowable is too high" AND "AMT depreciation allowed or allowable is too high." It was a relatively low cost car and due to the mileage deductions over the years the total depreciation is probably higher than the total initial cost of the vehicle (which was $8000). The error points to lines 51 and 52 of the Car & Truck Expenses Worksheet, which both show $8000 in red font.

You suggested to "report the Original Cost you entered for your Vehicle as both Depreciation and AMT Depreciation amounts. In FORMS mode, you can type the amount right on the Vehicle Expense Worksheet." Those amounts on 51 and 52 are the original cost. Besides I can't seem to overwrite anything in forms mode either.

Any other suggestions or clarifications, please?

Thanks!!

Re: If you had a lower-cost vehicle when you first set it up...

MartinS1 — Fri, 11 Oct 2019 06:12:13 GMT

Never mind.

I deleted the car and re-entered it from scratch. That cleared the error.

Thanks!