Loss on Sale of a Business Vehicle

[daveka88]

In 2018 I traded in a business vehicle and incurred a LOSS.  However, I have tried everything but I cannot get TurboTax to show the loss.  Form 4797 shows the trade in value as a gain and forces me to pay taxes on this incorrect gain.  What am I doing wrong?  How can I get the program to properly reflect a loss?

[tagteam]

Can you post your exact figures (cost, value at disposition, dates, etc.)?

Don't forget that you have depreciation allowed (or allowable) to factor into the equation.

[daveka88]

Thanks for the reply!  I traded in a vehicle and these figures represent the business portion of the transaction:

Selling Price $2287

Depreciation to date (derived from the standard mileage rates for each year) $3738

Original cost:  $7388

Again, these figures represent the business portion for a 2011 Toyota Rav 4.  The remainder of the transaction was related to personal use.  I just cannot figure out how to get Turbotax to recognize a LOSS on the disposition of a vehicle used for business.

[tagteam]

I entered your figures several ways (as an asset subject to depreciation and as a "business vehicle expense" that was disposed of) and was able to get my copy of TurboTax Home & Business to recognize a loss. 

Which version of TurboTax are you using and how are you entering the figures? This should not really be all that difficult.

[daveka88]

Thanks again so much for your help.  I am using TurboTax 2018 desktop version.  I enter the data on the step by step screens for Business Income and Expenses (vehicle section)

1.  I answer the prompts and get a standard mileage deduction for 2018.

2.  Then it goes on to the vehicle disposition section:

3.  I enter the sales price (business portion) $2287

4.  Next screen, I enter vehicle total cost:  $7388

5.  Then I enter basis for gain $3650 (cost $7388 less accumulated depreciation $3738)

6.  Then I enter Prior Depreciation Equivalent $3738 (from the standard mileage rates 2011-2018)

7.  The program always says I have a GAIN of $2287

[daveka88]

BTW, I am using TurboTax Deluxe.

[tagteam]

As I stated earlier, I am using Home & Business, but that should not make much of a difference. Regardless, I suspect you should be entering $7388 as your basis, not $3650. That should get you closer, at least you will show a loss.

[daveka88]

Well, I did what you suggested and it still shows a gain of $2287 (equal to the sale price).  For some reason, the program is not recognizing the accumulated depreciation.  I appreciate your patience.  If it's not too much trouble can you tell me the screen entries you are making to get to the loss?  I won't keep bothering but it would be nice to know if it is a limitation of the TurboTax.

Thanks again.

[tagteam · Accepted solution]

I will make another suggestion because it also worked for me. I simply entered $2287 for the "sale price" and $3650 for the basis; no cost or accumulated depreciation entered.

See if that will work for you. Otherwise, I think an issue might be actually entering both the cost and basis. You might try entering one or the other but not both. 

[tmrauch]

I am having the exact same issue. No matter what I do, TurboTax keeps calculating a gain on my vehicle sale eventhough I'm sure it should be a loss. I even tried the suggestion from tagteam and, although the gain was much smaller, it STILL came up with a gain. It's very frustrating. In my case, based on mileage, the car was used 69% for business, got $7000 as a trade value (69% of $7000 = sale of $4830). Bought it for $28,000, reduced for depreciation using standard mileage reported over the last 5 years to an adjusted cost of $8759. When I take 69% of that, it's a cost of $6043 and a sale of $4830. How is that not a loss? It's really so frustrating. I have started to enter my data  into a different product. I've wasted so much time on this now.