since any sale or exchange will result in taxable income the only way is to donate to charity or make a gift
there are rules that must be followed
see this link - A donor's guide to vehicle donation
https://www.irs.gov/pub/irs-pdf/p4303.pdf
any gift must not be a disguised sale
If the asset is fully depreciated then the adjusted cost basis is zero. So if you sell/trade it for anything more than zero you have taxable capital gain event but not recaptured depreciation since you kept it the full 5 years.
Seems darn near everybody thinks that depreciation is a permanent deduction. Then they are surprised years later when they sell the depreciated asset, that it's not a permanent deduction.
If you took 100% depreciation the first year, then your cost basis on the asset is zero in the tax year you sell it or trade it in. If sold, any money received for the asset is reportable/taxable income. If traded in, any trade in amount you were compensated for the new vehicle is reportable. It's kinda like your cost basis of the new vehicle is reduced by the trade-in value.
Understood. Thanks.
Do you know the reasoning behind why individuals would buy a vehicle over 6000lbs take the section 179 depreciation to lower their taxable income, than sell the vehicle with an adjusted basis of 0, for a taxable gain? Is the reason because they will be taxed at a lower more favorable capital gains rate?