Received 1099-MISC for selling vehicle. How is it reported in Turbo Tax Premiere?

[mrenn0626]

I received a 1099-MISC from selling a car to a dealer.  I purchased the car for approximately $19000 2 years prior and sold it for $14500 a few months ago.  NADA value was $15250.  I know cars are considered capital assets and the sale was clearly a capital loss.  How does Turbo Tax account for Capital Losses?  If I enter it under Income 1099-MISC, it is treating it like income and not performing a cost basis analysis. 

[IsabellaG · Accepted solution]

You're correct that a car is a capital asset, and from the information you provided, you sold your car at a loss EXCEPT that a loss isn't deductible on the sale of an asset used for personal purposes. Most of the time, you wouldn't even report the sale, because you would have zero gain, and no deductible loss. 

Because this was reported to you on a 1099-MISC, it would be simpler to report it that way. 

First,  report the amount in 1099-MISC as income, because it's being reported to the IRS.

To report the income:

• Report the 1099-Misc in the Other Common Income section.
• Indicate that it is for the sale of a car, that it does not involve work like your main job, and that it did not involve an intent to make money. The income will be reported on line 21 of your return.

Next, you'll report a negative figure on line 21 of your return to show the cost basis of the car, but only up to the sales price, because, again, you can't claim a loss.

To enter the negative figure:

• Go back to Less Common Income, Miscellaneous Income and Other reportable income.
  
• Continue to the screen Other Taxable Income. Enter a description, something like "cost basis of personal car"  and a negative amount (- 14,500).

You'll wind up with $14500 reported as both a positive and a negative amount on line 21, and the end result will be zero.

[Steve37]

I affirm that the sale of your used car is the sale of a capital asset and reportable on Form 8949 which flows to Schedule D.

The information Isabella provides will probably be accepted by the IRS, but is not the proper way to do it.

The entirety of the transaction should be reported on Form 8949 which flows to Schedule D.  You enter the asset’s description in Column A,  purchase and sale dates in Columns B & C, proceeds in Column D, and the adjusted cost basis in Column E, which here is the book value at the time of sale.  The key is that you enter a code of “L” in Column F to indicate that “(y)ou have a nondeductible loss other than a loss indicated by code W” , where code “W” indicates a  wash sale applicable to stock and securities per the instructions for Form 8949, and either the software will enter the $ amount to make the gain/loss in Column H $0 or you will have to enter the loss so the gain/loss in Column H is $0.

[JlbLivingston]

If one is filing taxes through turbo tax, how does one do the 8949 as recommended. When searching the form options this does not appear. Is the first recommendation the way to file this for turbo tax?

[ThomasM125]

You need to report the sale in the "Investment Income" section of TurboTax, and then "Stocks, Mutual funds, Bonds and Other."

Then, choose "Personal Items" for the sale, it will then show up on form 8949.