You'll need to sign in or create an account to connect with an expert.
You did sell it, it's the same for tax purposes. You "sold" it to the repo company for the amount of the outstanding loan balance. That's your selling price.
For example, you purchased the car with a $20,000 loan. You stopped making payments. The outstanding balance of the loan was $15,000. The car was repossessed and you were dinged for a further deficiency of $3000. That means you "received" $12,000 as the selling price.
Now, if you "sold" the car for less than your adjusted basis, you will have a loss on the business, but if you sold it for more than your basis, you will owe depreciation recapture. It's just the way of things. Did you take a section 179 or other type of accelerated depreciation? You do owe tax now. You took a deduction before, that you need to repay. If you were doing normal depreciation, you might have a gain or loss, depending on the amount of business use and depreciation you previously claimed. Turbotax won't be able to give you an accurate picture of how the repossession affects your taxes until you give it all the facts.
While I do agree with Opus_17's response, things can get complicated when actions pertaining to this cross tax years.
If the vehicle was repo'd in 2020 and you did "NOT" receive a 1099-C - Cancellation of Debt for tax year 2020, then the vehicle is not yet sold. You'll indicate that it was removed from the business for personal use and leave it at that.
Then when/if for 2021 or a later tax year you get a 1099-C, you'll report the sale then for the amount on the 1099-C. You just reduce your cost basis in the vehicle by any depreciation already taken on the vehicle while it was a business asset. Then if your 1099-C value is more than that cost basis you have a taxable gain. If less, then you have a non-deductible loss.
Still have questions?
Make a postAsk questions and learn more about your taxes and finances.
asalot
Level 1
livnoutdoors
New Member
vivmayorga
New Member
rjo1993
New Member
pearl12970
Level 3
Did the information on this page answer your question?
You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.