I used a vehicle for business and traded it in for another business vehicle in June. I'm having trouble figuring out the deductions for both vehicles.

[dantheman98]

I am using Home and Business software. Some of what you have outlined I can't find where to input. I believe you have described the purchase of the new vehicle so I understand. However, the accounting for the old vehicle I am still not figuring out. Your help has been and will be invaluable.

[DaveF1006]

Here are an outline of steps that I posted earlier for one of our posters. Some of the details may be different but you may get some idea on the sequence of steps.

1. Go to federal>income and expenses>
2. Self-Employment>Self-employment income and expenses
3. Complete the profile that asks about your business
4. Then there will be a screen where you will enter your self-employment income.
5. After entering, you will start entering expenses into your program (you may have reached this point but I have to mention)
6. Move down to vehicle expenses.
7. As you start to enter your vehicle expenses, be sure to check the box indicating you stopped using the vehicle in 2021. Then a pop up will appear that asks you to enter the date you sold the car.
8. Now scroll through and answer the questions correctly, including mileage etc. Continue through until you are informed what your mileage deduction will be.
9. Continue until it asks for the sales price of the card. This is generally the trade in value you received for the car. Use the business portion percentage to enter this
10. Next you will enter the business portion cost basis of the vehicle. This is the cost of the vehicle when you first bought it.
11. If you bought the vehicle on a trade in, you will fill out the information in the Let's get the info on your gain or loss basis screen.
12. Now there will be a screen where you need to calculate Depreciation Equivalent. If you have taken the mileage deduction in previous years, you need to enter the prior Depreciation Equivalent.  To determine this value, you will need to get all the mileage records from previous years and multiply the equivalent listed in the learn more link that is listed on the page. If you claimed mileage in previous years, part of the mileage deduction had a depreciation component attached to the mileage deduction. Now since you sold your vehicle, a depreciation recapture must take place to recapture that previously claimed depreciation.
13. Let me know if this helps.

[ Edited 03/22/22| 03:13 PMPST]

@dantheman98 

[dantheman98]

Dave, two questions from your last post. Frist on step 9, the system says to use the business portion but you mentioned it is the sale price. Just making sure that I am putting the right number down. On step 12, the system says that turbo tax will compute the depreciation equivalent. Does the system add that number into what I enter, so I only need to enter 2019 and 2020 calculations?

Thank you for your help!!!

[DaveF1006]

Yes, calculate the business portion of the basis and the sales price so that you will not experience a full gain or loss. Multiply each by the business percentage that you used the vehicle. 

For the depreciation equivalent, you will need to calculate this. To do this, click on the learn more link that is listed on  the page to calculate the depreciation equivalent. 

• For all of the years that you claimed mileage in the past, you need to multiply each year's mileage by the percentage that is shown in the learn more link. So if you claimed 10,000 miles in year 2019, you would multiply that by .26.
• For 2020, the mileage will be multiplied by .27.
• add those two amounts and that is the total that will be recorded in the prior depreciation boxes.
• I used year's 2019 and 2020 but this will be reported for all prior years that you reported mileage. 

@dantheman98

[Darickbrown]

That answer just confused me more

[BillM223]

This has been a long thread with a number of questions. What is specifically your question?

@Darickbrown

[Darickbrown]

I guess I'm somewhat frustrated.  I apologize, I've used TT as long as I can remember because it makes doing my taxes easy.  I have never had as complicated calculation/TT questions poorly explained as this. 

Here goes.

I traded my vehicle that I used approximately 75% of the time for business on December 29, 2021.  It was a trade in of a trade in of a trade in, etc.  Do I use what I think it was worth when I put it to use in 2019 or do I use the difference of a trade in.  

I'm totally confused on the next pages calculation.

Basis for gain/loss and Basis for AMT gain/loss

Then the next page, just as lost.

[AmyC]

You used to go through the trade in of like kind property in the past. The IRS changed the rules in 2018 and now you have to just sell the car you traded in and enter the new vehicle as an asset.

Your traded in vehicle was purchased 2019, after the new laws, so the basis should be simply what you paid for it. You would only have a different AMT value if you had a form 6251 from a prior year regarding this vehicle.

@Darickbrown

[johnhancock33]

Hello-2022 vehicle transaction:

-trade in allowance=$16,000

-loan payoff on trade in vehicle=$13,470

From your posts, it appears that sales price (for the depreciation etc calculation section) is the $16,000.   Do I ever get to expense the $13,470 anywhere?  As part of the new vehicle purchase price maybe?  I initially just used the net gain, which is apparently incorrect.  Makes a big difference!  Thanks very much.

[ckrieg]

On a farm return how do I enter a new tractor when I traded in an old tractor that was fully depreciated?

Thanks

[ThomasM125]

You need to treat the trade-in value of the old tractor as a gain on sale of it, since it was fully depreciated. Then, you can add the new tractor as a farm asset and depreciate the cost of the new tractor.

You will start by entering the Business section of TurboTax and accessing your farm income and expenses entries. On the screen that says Your Farming Income and Expenses, choose the Farm Assets option, and then Assets depreciated in TurboTax associated with this farm. Update that section and say "Yes" to the option of going directly to your asset summary.

There you will see the tractor you traded in. Edit that section and when you come to the screen that says Tell Us More About This Farm  Asset, check the box that says the item was sold. Work through the rest of that section to enter the information regarding the sale of the tractor, and enter the trade in value as the sale price.

To add the new Tractor, go through the same steps but indicate that you are adding a new asset.

@ckrieg

[ckrieg]

Thank you very much for walking me through that.