Gain/loss on personal vehicle used for business

[TLR2021]

We have traded in a vehicle during 2021 that is primarily used for business - 85%.  We always just took the standard mileage deduction.  I have entered into turbo tax that we stopped using the vehicle along with 85% of the trade in value as sales price and also input the original purchase price under vehicle total cost.

I don't understand what or how to fill in the next section regarding gain/loss basis.  Do I leave these fields blank since we always took the standard mileage deduction.  If not, please advise what goes into this section.  So confused.

[RaifH]

A portion of the standard mileage deduction is considered depreciation:

Year(s)     Depreciation   Rate per Mile  

2021           $0.26  

2020             0.27  

2019             0.26  

2017–2018  0.25  

2015–2016  0.24  

2014             0.22  

2012–2013  0.23  

2011            0.22  

2010            0.23  

2008–2009  0.21  

2007             0.19  

2005–2006   0.17

You will have to see how many miles you drove the vehicle for business in the prior years to determine how much prior depreciation you took. For example, if you drove 10,000 business miles in 2020, your depreciation for 2020 is $2,700. 

The proceeds from the sale is only 85% of the total since it was used 85% for business. The same with the sales expenses. You will enter the total cost. TurboTax will take 85% of your total cost, subtract the prior years' and current year's depreciation to determine the cost basis. Your proceeds reported on 85% of the sale minus the cost basis will determine your gain or loss. 

[TLR2021]

Just to confirm, I need to take business mile driven since we purchased this vehicle times the mileage rate for each year and then that total amount is input into the basis for gain/loss as a dollar amount?

[JulieS]

Yes, that is correct.

@TLR2021

[TLR2021]

Thank you.  I have updated the basis for gain/loss field with the calculated amount in dollars.  Once I move to next tab for Calculated Depreciation equivalent what do I input on this screen?  It's asking for Prior depreciation equivalent or AMT prior depreciation equivalent.

[ThomasM125]

You have to multiply the business miles claimed each year by  the depreciation equivalent factor for each year and then add each year's depreciation together to come up with a total for the depreciation claimed in previous years. See the post by @RaifH for the factors.

[TLR2021]

Yes, I have that calculation and total amount.  Turbo Tax has a screen to input basis for gain/loss; which I entered the total I calculated and then the next screen is asking for prior depreciation equivalent.  Does the total amount go into each field?

[TLR2021]

Got disconnected.....still need input on last post.  Please advise.

[ThomasM125]

The basis is the cost of the vehicle or fair market value when put into business use, whichever is smaller, times the percent that you use it for business. You put that amount is as the basis and then the other entry is for the depreciation.

[rachelrose1016]

So to confirm:

Basis for Gain/Loss: Purchase price + improvements - depreciation. Is depreciation here calculated using the $/mile shown above * business mileage OR using values from 1040 from previous years tax reports?

Prior Depreciation Equivalent: $/mile * business mileage  (as stated at the beginning of the post)

Anyone know what is correct?

[AmyC]

Depreciation is either actual depreciation taken as actual expenses or part of the standard mileage. For standard using your business miles times the depreciation amount each yeare:

For 2021, it was 26 cents per mile.

For 2020, it was 27 cents per mile driven. 

For 2019, 26 cents per mile. 

For 2017 and 2018, 25 cents per mile, 

For 2016 it was 19 cents per mile. 

You can google  IRS mileage depreciation if you need more years.

Example:

Drove 3,000 miles in 2021 and 12,000 in 2020 for business use.

3,000 x 0.26 + 12,000 x 0.27 = depreciation taken

@rachelrose1016