I traded in a business vehicle for another business vehicle on 1/1/2018. how would I calculate the gain/loss basis and previous years depreciation?

[MarilynG]

If you have been claiming expenses for your Business Vehicle, go to your Self Employment Expenses.  Type 'schedule c' in the Search window, and 'Jump to schedule c' to get there. 

Edit your Vehicle, and indicate you 'stopped using it for business' on 1/1/18 (screenshot).  TurboTax will ask questions about ownership, other vehicles, business mileage in 2018, etc.

Since you traded in the vehicle, you could enter $0 as a sales price, and subtract the amount of trade-in you received from the new vehicle's basis when you enter it as a Business Asset.  

Or, you could report the Sales Price as the trade-in amount, and set up the new vehicle with a cost basis of what you paid for it. 

When entering these amounts use the % of Business Use as your entries.

If you have been claiming Standard Mileage for your business mileage, depreciation is included in the deduction. 

Here's how to calculate the Standard Mileage Depreciation Equivalent (use the same amount for 'Basis for gain/loss' and 'Basis for AMT gain/loss'):

"Depreciation equivalent for total miles is a small portion of depreciation that is included (by default) when using standard mileage rate for your business car.  When you take standard mileage rate while deducting your business car miles, you must account for 'depreciation equivalent' when disposing of that car. 

The IRS provides a table with the depreciation equivalent rate for each year (page 24 of the link, IRS publication 463)

2012 and 2013: rate is $0.23/mile

2014: rate is $0.22/mile

2015 and 2016: rate is $0.24/mile

 Example: You drove 1000 miles as business miles in 2014, 2015 and 2016 and took standard mileage deduction for each year. To calculate your depreciation equivalent - when disposing your car - you must know how many business miles you drove and the depreciation equivalent rate from the IRS (which I listed above). The calculation is as follows:

2014: 1000 miles times $0.22 rate = $220

2015 and 2016: 2000 miles times $0.24 rate =$480

Your total depreciation equivalent (also called total prior depreciation) is $700 (the same amount applies to AMT). Note: When depreciation equivalent is added, it changes your cost basis for the car. 

Answered by TurboTaxMargaretL"

[jessiedee23]

if I take standard mileage why would I enter the new vehicle as an asset?

[hbval]

If you wanted to start using actual expenses.  

[daveboyer]

I have a bit of a unique problem and I am trying to solve it.  I have talked to three Turbo Tax experts online, and none of them could help solve my problem.  I sold my old car on 8/24.  I am an independent contractor who uses a personal vehicle less than 50% of the time for business.  I have always taken the standard deduction for mileage and I have never used form 179 to depreciate the vehicle in any year.  As I am itemizing my expenses for schedule C, for my vehicle expenses, I am being asked to detail the information about the car I am taking out of service.  The dealership offered me $500 for my old car.  I used it 24.71% in 2020, meaning $124 applied as a business gain, which I entered.  Then, I get taken to a screen that asks me about "vehicle Cost".  I am assuming this was the original cost of the vehicle, when I bought it in 2008, so I entered that cost of $35000.  I then got a screen to determine basis of loss/gain.  I originally bought this car for $35000, and traded in a car that was worth $23000 (new in 2003), so I list my gain as $12000.  The next screen asks me for my prior depreciation equivalent, which is $31116.  The next screen tells me that my Gain on Sale is $124.  When I go to my main page of income and expenses, it lists the "Sale of Business Property" as $5808.  Nobody can tell me why that number is popping as income, and nobody can tell me what I am entering wrong.  Can you help?

[MarilynG1]

@daveboyer Your 'Cost of your Business Vehicle' is the FMV when you started using it for Business. 

You don't need to enter the value of the vehicle you traded in for this vehicle, unless it was also used for Business, and you were claiming Standard Mileage for it. 

If this this the case, then your 'new' Business Vehicle would have a Cost Basis of $12,000, which was fully depreciated with your Depreciation Equivalent of $31,000.  Make sure this Depreciation Equivalent is correct.  It sounds too high if you only used your Business Vehicle 24% of the time.  You can only enter an amount of Depreciation not greater than the Cost Basis, which indicates that the vehicle was fully depreciated.

This then reports it as a 'Sale of Business Property'.  TurboTax will do this automatically for you. You can Delete the Sale of Business Property in your return and go back to your Business and re-enter the Sale/Disposition info.

You should have a Sales of Business Property gain of $500, which is what you received for your fully-depreciated Business Vehicle. 

Click this link for more info on Sale/Disposition of Business Vehicle.