Sold a Schedule C vehicle to a dealership and then leased a new vehicle from them. Where in TT do I report the disposition of my old vehicle? Do I ignore the Bus Exp Sec?

[LisaBr]

As you input your vehicle information, the first page asks about your vehicle.  Describe the old vehicle and when you first used for business. At the bottom of this page, there's a small check-mark box, "I stopped using this vehicle in 2017".  This opens up another question about when you stopped using the old vehicle. 

2.  The next questions are asking about the business use of the old vehicle from 01/01/2017 until the date you stopped using the vehicle.  Answer these questions with this in mind, you will add the other vehicle and expenses later, once you've completed this area.

3.  Next, TurboTax asks you about trading in your old vehicle and getting the new vehicle.  Depreciation will be figured here.

4.  Then, there's one more step.  Add a vehicle.  This is where your will add your new car and answer the questions relating to it's business miles from the time you began using it in 2017.

Once you've completed these three areas, all your vehicle expenses will be entered as well as depreciation and the information will be carried forward until next year.

[AnnMarie]

I apologize.  I did not give enough information.  (The character allotment was too small for my full explanation and question.)  First of all, I am reporting as a sole proprietor – not an employee.  Secondly, in 2017 I did not use the old vehicle (SOLD) for business,  nor did I use the new Leased Vehicle for business.  Previously, I deducted mileage.  For this year’s return, I entered $0.00 for this deduction under Business Vehicle Expenses and checked:  “I stopped using this vehicle in 2017.”  I chose “Edit this vehicle” and was brought to Form 8824, which – I believe – wanted me to enter the FMV of the leased vehicle.  I believe this Form, which is very confusing, determines the basis for depreciation.  From what I understand, leased vehicles cannot be depreciated.  Regardless, I am not using the leased vehicle for business and, in my mind, there is no like-kind exchange.  Please correct me if I am wrong with any of this information.   In my research to solve my dilemma,  I had read TT questions and answers and a TT Rep had said to choose Uncommon Items and report the old vehicle as a sale, but I cannot find that section.  With this additional information, what do you suggest?

[LisaBr]

Now, I understand much better.  Did you sell the vehicle for more than you paid for it?

[AnnMarie]

No.   I paid $17,946.00 and the dealership gave me $1,000.00 for it when I leased the new vehicle.  In case you need to know, the depreciation recapture, covering a period of five years, amounted to $2,862.28 on the date of sale.

[LisaBr]

When did you actually stop using the old vehicle for your business as sole proprietor?  Also when did you sell vehicle to dealership?  I am getting to an answer for you but just need a few more details.

[AnnMarie]

Stopped using the old vehicle on 12/31/2016.  Sold the old vehicle on 4/27/2017 and leased the new vehicle on 4/27/2017.  Thanks so much for all your efforts!

[LisaBr]

The bottom line is you have nothing to report for 2017.  You stopped using the vehicle for your business in 2016, so at that point it became personal property.  You can not take a loss for personal property.  Just to be sure, I shared this question with one of my Supervisors and she agreed that I was correct.  I really appreciate your sharing your information with me.  It really made a difference.

[AnnMarie]

Thank you, Lisa.  I will go back in the morning and delete the entries I made in the Business Vehicle Expense section and "hope" that clears any entries made on Form 8824.  If I have trouble - please forgive me - I will pester you again.

[LisaBr]

That will be just fine.