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glassart
New Member

The remaining car loan was $4000. The car was totaled and the vehicle settlement was $10,000. Is the 'sale price' $10,000 minus remaining loan? or $10,000? or nothing?

This is for self-employed business vehicle expense section.
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JulieH1
New Member

The remaining car loan was $4000. The car was totaled and the vehicle settlement was $10,000. Is the 'sale price' $10,000 minus remaining loan? or $10,000? or nothing?

When you are entering a sale price for your business vehicle the IRS considers this to be the amount the insurance company paid to settle the case.  So, you would enter $10,000.

Did you purchase a new vehicle to replace it? If so, the new vehicle will be the one you "traded" for the old. 

Here is some more information to help explain the process of entering a totaled car into TurboTax with some explanations.

The program is prompting you to answer questions so it can inform the IRS that you disposed of the car. You have to calculate a gain or loss on your vehicle.

TurboTax is asking about depreciation because you disposed of your car and now you have Depreciation Recapture.

If you used the actual vehicle expenses to report your vehicle, you should have a depreciation report.

If you used the standard mileage rate for the business use of your car, depreciation was included in the standard mileage rate. 

Since depreciation accumulates, each year's business mileage affects the adjusted basis of the vehicle. The adjusted basis will, in turn, be used to determine the gain or loss when the vehicle is sold or disposed of, so keeping good records is essential. 

Please see the image below for the Rate of Depreciation Allowed in Standard Mileage Rate and the example at the bottom of the page, on how to calculate the depreciation taken in prior years. 

See Business Use of Vehicles https://turbotax.intuit.com/tax-tools/tax-tips/Small-Business-Taxes/Business-Use-of-Vehicles/INF1207...

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1 Reply
JulieH1
New Member

The remaining car loan was $4000. The car was totaled and the vehicle settlement was $10,000. Is the 'sale price' $10,000 minus remaining loan? or $10,000? or nothing?

When you are entering a sale price for your business vehicle the IRS considers this to be the amount the insurance company paid to settle the case.  So, you would enter $10,000.

Did you purchase a new vehicle to replace it? If so, the new vehicle will be the one you "traded" for the old. 

Here is some more information to help explain the process of entering a totaled car into TurboTax with some explanations.

The program is prompting you to answer questions so it can inform the IRS that you disposed of the car. You have to calculate a gain or loss on your vehicle.

TurboTax is asking about depreciation because you disposed of your car and now you have Depreciation Recapture.

If you used the actual vehicle expenses to report your vehicle, you should have a depreciation report.

If you used the standard mileage rate for the business use of your car, depreciation was included in the standard mileage rate. 

Since depreciation accumulates, each year's business mileage affects the adjusted basis of the vehicle. The adjusted basis will, in turn, be used to determine the gain or loss when the vehicle is sold or disposed of, so keeping good records is essential. 

Please see the image below for the Rate of Depreciation Allowed in Standard Mileage Rate and the example at the bottom of the page, on how to calculate the depreciation taken in prior years. 

See Business Use of Vehicles https://turbotax.intuit.com/tax-tools/tax-tips/Small-Business-Taxes/Business-Use-of-Vehicles/INF1207...

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