Error on Car & Truck Expenses Worksheet

[LifeinPTC]

I have a red exclamation point on the Car and Truck Worksheet. It wants an entry for Prior Depreciation and AMT Prior Depreciation. Here's the situation:

I put my car in service in 2014. I retired last year so I'm converting it to personal use.

1) I've taken the standard mileage deduction each year until 2024 when I'm using actual expenses.

2) The business use has never been above 50%.

When I go to Less Common Business Situations>Sale of Business Property>Any Other Property Sales?, the box is checked for recapture of Sec 179 or listed property. On the next screen it asks the question "Did your business usage fall to 50% or less for the first time in 2024?". Well, no it didn't because it was never above 50%. So I'm confused why I'm getting the error on the worksheet. Have I answered something incorrectly along the way?

Thanks so much for the help!

[DianeW777]

It depends. You do not have any section 179 recapture because you used the standard mileage rate for all years except 2024, when it would not apply.  Remove the checkbox and there is no Sale of Business Property unless you traded or sold the car in 2024. Is that the case? Continue to review the information below.

You are correct, answer 'No' 'Did you business usage fall to 50% or less for the first time in 2024?' Regular and AMT depreciation would be the same figure.

If you simply converted the vehicle to personal uses (no trade or sale) then do not enter anything under Sale of Business Property. Select that in the vehicle section and stop there. 

As far as the depreciation used on the vehicle if I assume you did trade or sell it you can calculate the depreciation portion for business miles using the image below and can also be found in IRS Publication 463.

The way to report the sale (trade is not really recognized by the IRS any longer for equipment or vehicles) is as follows. You have all the records so it should provide you the detail to move forward.

1. All business miles for all years and then total miles for all years - divide business miles by total miles to arrive at your overall business use percentage for the life of the vehicle. You will use this percentage times the selling price (or trade-in value) to arrive at the business selling price. Use the same percentage to arrive at your business portion of the cost before depreciation. 
2. You used the standard mileage rate and a portion of that rate represents depreciation. See the chart below to arrive at the depreciation portion for the business miles only.
3. When you go through the vehicle information in your rental or business be sure to select 'Sold, disposed of, etc....' then do not indicate it was sold.  You must say 'Yes' it was converted to personal use.  This will eliminate any sales information in the vehicle it self.
4. Do not enter Sale of Business Property unless you actually sold or traded it. When this happens you will have a taxable event. Keep all of your records.