Hello,
Turbotax (TT) is telling me I have a gain on a business vehicle that I traded in for $4,000 less than I paid for it and I don't understand why. Can anyone please help?
I purchased a business vehicle for $26,000 in 2021.
Business usage was 83% in 2021 and 30% in 2022.
Used Standard Mileage Deduction in 2021 and no special depreciation taken.
Only owned from April 2021 through 8/15/22.
Traded this car in for $22,000 credit towards a new car on 08/15/2022.
I will be using the Standard mileage credit (unless advised otherwise) on the new business vehicle just purchased, but business usage will probably be low again this year. New Car purchased is ~$40K
2021 Depreciation is $980 in 2021 @26 cents.
How is it that Turbo Tax is telling me I have a gain on the vehicle? I lost over $4,000 on the trade-in.
Even if you take out depreciation (26cents/mile) for both 2022 (~$530) and 2021 (~$980), I still LOST over $2k and yet Turbo Tax says I have a gain.
I used a combination of cash and financing to purchase the trade-in vehicle in 2021 and did not trade anything in for it.
Is the the correct entry?
Trade-in Sales Price = $22,000
Gain/Loss Basis = Leave at zero because trade-in was not used in purchase and not a 100% personal use.
Prior Dep/AMT Depreciation = 980
Even if I use $3,912 (TT says business use is 17.78% *22,000), TT still says I have a gain!!
Where am I going wrong, there is absolutely no gain on this trade-in vehicle!
Thanks in advance.
