I had a Vehicle that I surrendered back in July through the CAP (Consumer Assistance Program Vehicle Retirement) through the Bureau of Automotive and Repair that offered $1500 or $1000 incentive.
Would I need to fill out a 4255 Recapture of Investment Credit form for this purpose or is there a different form I need to fill out ??
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It depends. It's unlikely you would need Form 4255, however if you used the vehicle in your self employment business, Schedule C, then you would report a sale of the vehicle. Essentially you are recapturing the depreciation you used for the vehicle. This would be actual depreciation you deducted or the standard mileage rate (SMR) portion that represents depreciation.
First, the correct action is that you have taken this vehicle out of service (sold, disposed of, etc). For tax purposes, when it was surrendered for money you have created 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.
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.
Once this is completed your sale will be recorded properly on your return. The image below is the correct selection for this sale.
[Edited: 04/06/2024 | 9:45 AM PST]
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