I totaled my vehicle that I used to use for business part of the time in the beginning of 2025. I received the total loss settlement 1/3/25. How do I report this?

[lauren-ingraham12]

Would it be considered abandoned?

[Opus 17]

Report it as "sold" to the insurance company for the amount of the settlement.  The program should be able to calculate whether any part of the settlement is taxable income due to recapture of depreciation.  

[Vanessa A · Accepted solution]

No. It would not be considered abandoned. It would be considered sold if you totaled it. 

To enter the disposition of a business asset take the following steps:

1.  go to the Self-Employment section and select edit next to your vehicle. 
2. Go through the steps and check the box that says I stopped using this vehicle in 2025
3. You will need to say you sold this vehicle
4. When you are asked for the sales price enter any insurance payouts you received. 
5. Continue through answering the questions so that the property and any payouts can be properly allocated
    

The amount you can deduct will be limited by:

• value of the car versus depreciation taken
• Insurance payout
• percent of use for business versus personal

Depreciation:  If you used the car in previous years and the car is fully depreciated, then your cars value would already be $0 so you would not be able to take a deduction for this.  However, if you received an insurance payout and the car was fully depreciated, then you would actually have a gain on the disposition of the vehicle and this would be taxable income.

If you used standard mileage deduction, you would depreciate your vehicle using the cents per mile allocated to depreciation based on the year. 
The portion of the business standard mileage rate treated as depreciation is:

27 center per mile for 2020 

26 cents per mile for 2021 & 2022

28 cents per mile for 2023

 30 cents per mile for 2024

 33 cents per mile for 2025
 

If you used actual expenses, then you would look at your forms from last year to see your total depreciation taken on the vehicle. You will find this on the depreciation worksheet. If you took an accelerated depreciation method (ex. you bought the car in 2024 and took full depreciation, then it would have $0 value)

Note:  If you had a loan on this vehicle and your payout did not cover the loan, this amount is not deductible.  The loan does not affect the vehicles sales price or value.