We donated a car that we used 10% for business. Schedule C is asking for sale price. We did not claim depreciation. How to handle?

[rooneycjtaxes]

We donated a car that we used 10% for business. Schedule C is asking for sale price when we are doing "disposition of vehicle". Is this the price that the charity sold the car for? 

However, we did not claim depreciation for the vehicle. We just did standard mileage each year. 

Not sure how best to handle this or reflect it. 

[Spino]

The IRS has a publication for this: https://www.irs.gov/publications/p544

One, put a number in the blank. That way it shows you did dispose of the vehicle and it won't keep showing up.

Two, we almost always sell vehicles for less than we bought them. Therefore they are sold at a loss. Therefore we don't need to recover depreciation, since it did actually...depreciate!

Three, you bought the vehicle personally, it depreciated, and you sold (donated) it personally. You did not get anything for the sale. Your sale price is therefore 0.

Four, you owned the vehicle personally, not in the business. Therefore the value of the donation (remainder value after depreciation of your asset, almost always lower than your purchase price) is a personal deduction, not a business deduction. "In general, charitable contributions are not allowed as a business expense on the Schedule C. However, if you made a payment to a charitable organization that was not for charity nor a gift, you may deduct the payment as an expense to the business. [copied from another TT discussion]"

If you did make a profit on the sale of a vehicle, the detailed calculations would be complicated--the standard mileage rate includes depreciation, so you did claim depreciation if you took the standard mileage rate, but you don't have calculated how much. 

"SECTION 4. BASIS REDUCTION AMOUNT For automobiles a taxpayer uses for business purposes, the portion of the business standard mileage rate treated as depreciation is 25 cents per mile for 2018, 26 cents per mile for 2019, 27 cents per mile for 2020, 26 cents per mile for 2021, and 26 cents per mile for 2022. See section 4.04 of Rev. Proc. 2019-46. " https://www.irs.gov/tax-professionals/standard-mileage-rates references this.

[rooneycjtaxes]

Thank you! This was very helpful. 

Now I'm stuck on Basis for gain/loss and Basis for AMT gain/loss. Not sure what these mean. 

I am able to do this calculation: 

Price of the vehicle when placed in service: $15K. 

Used 10% for business. 

Total mileage when disposed of = X. 

X times 10% = Y. 

What I do with Y in relation to Basis for gain/loss or Basis for AMT gain/loss, I do not know. 

Any suggestions on this? 

[Spino]

The point is that...

1) You can't deduct a loss as a business expense because you used personal funds (post-tax) to buy the car.

2) You won't [ever?!] have a gain on a normal vehicle used personally or in business.

3) You can't deduct a loss on a personal vehicle anywhere, because you just consumed something. The IRS only taxes income, it doesn't deduct consumption.

so...

I don't see much point in helping you with your calculation, unless I can think of some reason it might affect your taxes. Just don't show a GAIN on the sale of your vehicle anywhere and you should be fine, unless I'm missing something 🙂

In other words, for the sake of taxes and AMT taxes a $1 personal loss is the same as a $1000 personal loss--irrelevant. The IRS only cares if you had a gain and they can tax it. In that case, they want to recoup the depreciation you took in the standard mileage on your business when the car didn't really depreciate, but instead appreciated (e.g., increased in value) and they want to recoup that depreciation at the same rate you deducted it--ordinary income rates, not lower capital gain rates.

[rooneycjtaxes]

Thank you! That explanation helps me understand this section. I am certain it's me that is missing something and not you. I'm mainly trying to get through each section and screen of TurboTax and those calculations were me trying to do that as I was following all the prompts and questions. It was a 19-year-old vehicle, so there is no gain at all. We donated it to get rid of it and I'm not interested in any sort of loss either. I am just trying to find a way to get through the section, answer the questions, and have the audit checker at the end not raise any flags. Maybe I can leave them blank if I can't figure out how to answer the questions.