Hello! If we traded a business vehicle for another business vehicle and the trade value is used as income, how do we change: "REVIEW" depr allowed/allowablke is too large

[westcoasttopsva]

review message as follows: AMT dep allowed/ allowable-1 is too large.Depreciation cannot exceed business basis.
I sold a business vehicle this year and I keep getting the following message for Check This Entry on my federal review: "Schedule C (*business name*) -- Car & Truck expenses worksheet (*car make and model*): AMT dep allowed/ allowable-1 is too large. For disposition calculations, depreciation cannot exceed business basis. Please see Tax Help for this field.
When I try to find it and make changes, it does not allow. Please help. thx

[DianeW777 · Accepted solution]

The steps to sell your old vehicle (the one traded) are shown below for your assistance. I hope it helps.  The correct action is that you have taken this vehicle out of service (sold, disposed of, etc). For tax purposes, when it was sold you have create a taxable event.  The information below will show what to select so that the vehicle will not come up again and this starts at the federal return. There is a difference in calculating the sale based on whether you used only the standard mileage rate or actual expenses or both. Since you used it since 2001 (?) it is likely fully depreciated.  If this is the case you will have a gain and you must report the sale as well. 

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.
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 it self.
4. Once you have completed the information in that section you will follow the steps below to enter your sale:
   1. Go to Less Common Business Situations
   2. Scroll to Sale of  Business Property
   3. On the next screen select Any Other Property Sale
   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 the federal and state return should reflect the correct gain.  See the depreciation portion of the standard mileage rate below.

[westcoasttopsva]

Thank you Diane for your quick response. 

It is actually a 2020 truck traded for a 2021 Truck in 2022. It keeps getting a review on the schedule c car and truck worksheet that says depr allowed is too much, but it will not let me change it on the page and I can't find the worksheet to change it. 

[westcoasttopsva]

oh I see...CONVERT to personal use. THANK YOU!!

[westcoasttopsva]

Diane!!!!! You are a life and tax saver! I have researched for hours trying to figure this out. Hope this helps others too. THANK YOU.