Business Car Deduction

[pulsipher200]

Hello,

I purchased my vehicle back in 2018 from my father for $5,000. In June, 2022 I got a job which required me to use my car 85% of the time for work (statutory employee). My car broke down in April, 2023. I bought a new car from a dealer and they offered $3,470 for a trade in to go toward my next vehicle which I am currently using for my work. How do I determine the Sales Price (Business portion only), Expense of Sale (Business portion only), Basis for gain/loss, Basis for AMT gain/loss, and Prior Depreciation Equivalent?

[RobertB4444]

The sales price is the trade in value of $3,470.  Expense of sale is how much you spent to fix the car up in order to get it ready to take to the dealership.  The basis is what you paid for the car ($5,000) and the prior depreciation is the depreciation that you should have taken in 2022.  Business percentage of all of that is based on the percent of the mileage that is business use.

If you didn't take depreciation on the car in 2022 I would suggest amending that tax return in order to get credit for it.  The sale of the vehicle is going to take the depreciation into account whether you took it or not so you should at least get the tax benefit from it.

@pulsipher200