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GregK1
New Member

Business vehicle sold

I sold a vehicle that I used mostly for business but did have available for personal use. I used itemized deductions for the past 16 years the vehicle was in use. The program says the depreciation cannot exceed the business basis. I sold the car for $600. It is saying the dep is $19428. I bought the car in 2004 for 22000. How is this right and how do I correct it?

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1 Reply
DianeW777
Expert Alumni

Business vehicle sold

It depends.  The steps below will show you how to enter the sale of this vehicle.

 

The way to report the sale or trade-in, (trade is not recognized by the IRS any longer for equipment or vehicles) is as follows. You have all the records so it should provide you the detail to move forward.

  1. All business miles for all years and then total miles for all years - divide business miles by total miles to arrive at your overall business use percentage for the life of the vehicle. You will use this percentage times the selling price (trade-in value) to arrive at the business selling price. 
  2. Calculate the standard mileage rate depreciation portion for the business miles each year if that is the method you used for the expenses each year.  If not use the depreciation you actually deducted each year your vehicle was used for your business. 
    •  A portion of the standard mileage rate is considered depreciation. See the rate in the chart below for each year.
  3. When go to the vehicle information under your business you can select 'Sold, disposed of, etc....' then do not indicate it was sold.  You must say 'Yes' it was converted to personal use.  This will eliminate any sales information in the vehicle itself to eliminate complication when business use varies.
  4. Once you have completed the information in that section you will follow the steps below to enter your sale:
    1. Go to Other Business Situations
    2. Scroll to Sale of  Business Property
    3. On the next screen select Sales of business or rental property that you haven't already reported
    4. Use the information from step one and the depreciation from step 2 to complete your sale
  5. If the personal portion of your vehicle is a loss there is nothing to report for that portion of the sale/trade.  

Once this is completed your sale will be recorded properly on your return. 

                                                      

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