Self-Employed Totalled Vehicle

[yemred]

Hi, I have two questions regarding an abandoned vehicle. I am an independent contractor, and my car at the time was totaled in an accident in March. Now, my first question is, I used rental vehicles from March to June. I didn't submit the miles I've made during this time but instead added the rental fees as an expense at the end of the "Vehicle" section. Is this the way to go?

Now, since my car was totaled (stopped being used), TurboTax asks me its sale price. For the Sales Price (Business Portion Only) I submitted the insurance reimbursement multiplied by the business percentage of total use. And for the Expense of Sale (Business Portion Only) I typed 0 as it was an insurance claim and I paid nothing. On the next page, it asks me about the vehicle cost. Since I started using this car for business 4 months before the accident, I typed a value close to the market value the insurance company has given me at the time. On the next page, it asks me my gain or loss basis. And after that the depreciation equivalent. I don't know what to enter on these pages. Should I just leave them blank?

[ZhuoliA · Accepted solution]

Yes, you can report the rental fees from March to June as an expense at the end of the "vehicle" section. The "gain or loss basis"  is the purchase price minus depreciation from the prior year you might have taken using the actual method. You will need to calculate 'Depreciation Equivalent' if you were using the standard mileage rate method.

The IRS provides a table with the depreciation equivalent rate in  Publication 463, Travel, Gift, and Car Expenses. For example, if your business mileage is 1,000 miles in 2021, your depreciation equivalent will be equal to $260. (1,000 X 0.26 (depreciation rate per mile for 2021 from the IRS table)