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cat18
New Member

I have rideshare income and take standard mileage deduction on my car. In federal review it is asking me for depreciation allowed? Why?

 
3 Replies
gloriah5200
Expert Alumni

I have rideshare income and take standard mileage deduction on my car. In federal review it is asking me for depreciation allowed? Why?

Did you trade the car in for a different one?

 

If so, then you must adjust the adjusted basis by the amount of depreciation allowed or allowable.  

 

If a vehicle used for business is sold, the portion of any gain that represents depreciation allowed or allowable, including the Sec-tion 179 expense and the special depreciation allowance, is recap-tured as ordinary income. The amount recaptured is the lesser of the gain from the sale or the depreciation allowed or allowable

 

Depreciation component of standard mileage rate.

For computing the taxpayer’s basis in an automobile, the standard mile-age rate has a component that represents depreciation.

 

For 2020, the depreciation component is 27¢ per mile. If the actual expense method is used in any year after the standard mileage rate method has been used, the straight-line method of depreciation must be used. (Rev. Proc. 2004-64)

 

Depreciation Component of the Standard Mileage RateYear.....................2020..........2019..........2018..........2017..........2016

Rate per mile.................27¢..........26¢............25¢............25¢............24¢

 

Note: These rates do not apply for any year in which the actual expenses method was used.

 

Depreciation beyond zero. The taxpayer must reduce the basis of an automobile by the depreciation component of the standard mileage rate, but the basis cannot go below zero.

 

If the depreciation component of the standard mileage rate exceeds the adjusted basis of the automobile, the automobile is considered fully depreciated, but this does not prevent the taxpayer from continuing to claim the full amount of the standard mileage rate.

 

The depreciation component is used only to compute gain or loss if the vehicle is sold or computing depreciation when switching from the standard mileage rate to the actual expenses method

Carl
Level 15

I have rideshare income and take standard mileage deduction on my car. In federal review it is asking me for depreciation allowed? Why?

On the website at https://bradfordtaxinstitute.com/free_resources/irs-mileage-rates.xml.aspx there's a chart a little bit more than halfway down that page, that shows the depreciation amount included in the business miles rate for each tax year from 2003 to present.

 

cat18
New Member

I have rideshare income and take standard mileage deduction on my car. In federal review it is asking me for depreciation allowed? Why?

Thanks for your replies.  The problem is that I thought she sold her car, but in fact, she didn't.  Her loan payments were assumed by someone else and she retained ownership of the car.  When I tried to go back and correct, now the worksheets in the background aren't updating to show that she did not sell her car.  Any idea how to correct?  I've tried deleting all 2020 rideshare income/expenses and re-entering, but that isn't clearing it.

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