Sale and FMV

[HelpAsNeeded]

I purchased a semi truck a couple of years ago for 150k.  I sold it for 105k but already took most of the depreciation on it (90k).   The FMV of the truck is $150k.  Do I end up claiming a gain on the sale? Is there a way to adjust for the FMV?

[ThomasM125]

The gain on the sale of the truck would be calculated by subtracting the depreciation from the cost to arrive at the cost basis. Then you would take the sale price minus the basis to arrive at the gain or loss on sale.  So, it appears you have a gain on the sale. The fair market value would not factor into the gain on sale.

The portion of the gain up to the depreciation taken would be taxed at ordinary federal tax rates. The rest of the gain would be taxed at capital gains rates.

[HelpAsNeeded]

Thank you!

[Mike9241]

you have 60K of remaining basis (150K of cost less 90k of depreciation), FMV is not used unless possibly a sale to a related party.  So, generally, the actual sales price of 105 will be used. Thus you have a gain of 45K (105K-60K). Since the depreciation allowed exceeds the gain the entire 45k will be taxed as section 1245 depreciation recapture taxed as ordinary income.