Car and Truck Expenses worksheet - line 51 Depreciation

[don21480]

I traded in a work vehicle this year on another vehicle. I'm getting an error that the depreciation allowed is too large. Depreciation cannot exceed business basis for disposition calculations. I've only used turbo tax so the program has been making the depreciation calculations since the vehicle I traded in was purchased new. Any suggestions? thanks!

[KrisD15]

The program is saying that you took more depreciation on the truck than what you are valuing it for the trade. 

If you purchased the truck for 25,000 and depreciated 15,000, you can only value the trade-in value at 10,000 or less.

You'll need to look at the depreciation schedule for that truck, which is included with your tax document file, and subtract the depreciation taken from the basis/cost of the vehicle. 

If you used Standard Mile Rate, depreciation is built into those miles. You'll then add the depreciation from each mile claimed. 

[don21480]

I owned the truck for 11 years and the basis as calculated by  Turbo Tax when I bought it was $29,611. The total depreciation as calculated by turbo tax over the years  is 27, 840. when I traded it in they gave me $11,529 so I realize I have a taxable sale but not sure why the $27,840 is being flagged as more than the basis.

[KrisD15]

What was the portion of business use? If the truck was also used for personal use, the cost/basis could have been reduced to reflex the business portion only. 

If your business portion fluctuated over the years (80%, 75%), the basis would also fluctuate. 

Please be sure to enter the 2024 miles driven business/personal in the vehicle expense section first, before reporting the trade. 

TurboTax will use the miles you report for 2024 when calculating the percentage of business use, which will in turn could affect the amount of the basis.