Business Use of a Personal Vehicle ... Sold

[kirkdb]

OK ... Totally confused on how to deal with the business use of a personal vehicle. This is a truck that I've paid for out of pocket (non business). I never used business income to make payments nor have I ever deducted the cost of the vehicle on our schedule C .. only business miles driven.

Every year since 2016 we have deducted business miles. Now for this year 2023 when I indicate that ive sold the truck it now wants me to go through a bunch of calculations and potentially show business income based on the sale value of the vehicle. This is my truck which I paid more then what I sold it for. Why would Turbo Tax be calculating business income? 

Thanks!!!

Kirk

[RobertB4444]

Each year when you entered the mileage for your truck you were entitled to take an additional depreciation deduction for the percentage of business use that the truck had.  

Depreciation is a weird deduction for the IRS because they require that you take it.  When you sell the property that you could have taken depreciation on they treat it as though you did take it even if you didn't.  So the sale of your vehicle is creating a business gain in depreciation recapture even though you didn't take the deduction in the first place.

You can go back three years and amend your returns to take the deduction so you can at least get the credit for it that you're having to pay for now.  

@kirkdb 

[kirkdb]

Right. I looked back on all the tax forms. There was no depreciation. So why wouldn't I just not request business use for that vehicle going forward, in other words, not mark as sold and for 2024 delete it off my return? I shouldn't have to go back 3yrs to adjust tax returns after selling a vehicle. This makes 0 sense to my simple mind 🙂

Thanks for the feedback!!!!

Kirk

[RobertB4444]

You used it for business in the past.  The IRS expected you to take the depreciation deduction.  Even though you didn't you're being treated as though you did.  So you can go back and take it since you're being treated like you did.  If the car you used for business for several years just disappears off of your tax return you may get a letter from the service.

@kirkdb 

[kirkdb]

And we don't like letters from the service.

Thanks @RobertB4444 

Kirk