Car totaled, insurance paid out, proceeds went fully towards replacement, but I show a gain in income

[jbauer1]

I partially use vehicles we own for business and percentage varies by year. I read the info on figuring out overall business percentage (total business miles over all years/total miles all years). I did as other posts said, marked that it was converted to 100% business use, put it in under other property sales. It shows me as having a gain on the vehicle. I put the newer vehicle in following the steps, including tax paid on the vehicle. 

1. Can I take all taxes paid for the vehicle under the property tax portion? (normally in WA property tax portion shows when you register it, but in this case it was paid at the dealership.).

2. Is there any way to deduct business portion of other fees paid (ie documentation dealer fee)?

3. Since we were out money to get a newer vehicle (double the insurance payout) - is there a way to recapture this and not show a gain on the "sale" of the other vehicle? (Right now the newer vehicle only shows the standard mileage deduction, even after putting in the taxes paid, and I show a gain on the older vehicle).

[AmyC]

1. Yes, property tax is not part of the basis of the vehicle, it is tax paid.

2. Yes, the cost of the vehicle includes dealer fees, registration, etc.

3. If you made a gain from the insurance payout greater than your business basis, you have a taxable gain. 

4. You chose to buy a more expensive vehicle, there is no requirement for the replacement vehicle. You can choose actual expenses or standard mileage  the first year. If you choose actual expenses, you may claim the Section 179 deduction to deduct more of the expense, based on your income and business use. Once you take the sec 179 and actual expenses, you will need to continue taking them. If you sell it before depreciated, you may have to recapture the depreciation. 

Reference:

• What is a Section 179 deduction?
• What is a Section 179 recapture?