How to determine Prior Depreciation for the sale of a Business Vehicle

[David581]

I traded in a vehicle that was purchased in 2018 for a new vehicle that was fully depreciated . When reporting the sale it asks for the amount of the special depreciation allowance that was taken but it also asks for prior depreciation.  Do I enter the amount of the depreciation that was taken over the prior 3 years as Prior Depreciation or do I enter $0?

[KrisD15]

It's a bit unclear, did you use it for business for only three years? 

If yes, and the vehicle was fully depreciated, you will need to enter bonus depreciation since the life of the vehicle is five years. 

If the program is showing the depreciation taken as the full amount of the business basis, there is no need to enter any bonus depreciation. 

If the program is determining depreciation based on the three years between "placed into service" and "date sold" you will need to add the remaining amount as the bonus deprecation you took the first year.  

The depreciation taken can't be more than the basis. 

[David581]

Thanks for getting back to me.

The vehicle (Tractor Trailer) was purchased in 2018 for $100,000 and sold for $30,000 in 2024. When I loaded TurboTax Premier on my computer it corrupted my prior tax returns and TurboTax was unable to pull up my past depreciation.

I took the Special Allowance Depreciation in 2018 of  $83,000 and the remaining depreciation of $17,000 was taken over the next 3 years.  I had to manually enter the $83,000 for the Special Allowance Depreciation but when it asked me for the Prior Depreciation it had a $0. 

[AmyC]

You need to be looking at your forms. You should see the $83,000 special allowance you entered along with the $17,000 of prior depreciation it sounds like you also had to enter. You know that you are fully depreciated and the $30,000 sales price is a gain on the sale.

Take a look at your form 4797 and be sure it is correct. You can adjust your entries if you find the program did pick up something from the prior year.

Choose to see everything, not just forms. You will be able to see depreciation schedules as well.

To print or view  your forms:

• In desktop, switch to Forms Mode. 
• For online:
  1. On the left side, select  Tax Tools
  2. Select Print center
  3. Select Print, save or preview this year's return
  4. If you have not paid, select pay now.

[David581]

Thanks!