Auto Mileage Write-Offs for Self-Employment

[jellsworth]

I have an side business that I used a truck for but this year I started a second side business. I purchased a new car to use for the 1st business and want to move the truck to the new business for mileage deductions. Is this allowed? Both vehicles will have separate mileage deductions for each business.

[MarilynG1]

Yes, in your first business, EDIT your Vehicle Asset, and report that you 'converted it to Personal Use'.

Then enter your new vehicle as a Vehicle Asset for the first business. 

For your second business, you can enter the truck as a Vehicle Asset.  However, for your 'Cost' you will need to use the undepreciated amount, since you already claimed some depreciation on it for your first business.

If you claimed Standard Mileage for it, about .25/mile is depreciation.  So if you claimed 10,000 Business Miles, for instance, you claimed $2,500 in Depreciation.  Subtract $2,500 from the Cost you entered for the truck when you first started using it for business, and that is the Cost you will enter when you add the truck to the second business.  There's a chart for each year on page 24, in IRS Pub. 463, if you want to be exact. 

If you claimed Actual Expenses for the truck in your first business, you will see the Depreciation Deduction amount on your Form 4562 for each year.  Subtract that amount from the original Cost Basis, and that's the Cost to enter for the truck in the second business.

Here's more info on Using a Vehicle for Business.

@jellsworth 

[jellsworth]

I am not sure I completely understand. So I purchased the vehicle for the Business #1 in 2021 and wrote off the mileage for it so I did not enter a cost for the truck when I first started using it. I just put in the mileage I drove for the business and it calculated the deduction.

[ErnieS0]

You can simply delete the truck from the old business and move it to the new business if you used standard mileage from the beginning and add the car to the old business.

There is no adjustment or recapture of depreciation for the truck at this time since you continue to use it for business.

Keep track of all your business mileage. When you sell, trade in, or abandon your truck, part of the mileage deduction is considered depreciation and will work to increase your profit (since you’ve been deducting part of your truck as mileage). But all that will be figured out later.