When did standard mileage deduction get so complicated (I sold my car)

[MauryM]

My goodness.  I bought a car for $30K back in 2010.  I used it for a number of years for personal use.  Then in 2018, I started occasionally using it on trips back and forth to work on my rental property.  I'd write off that mileage each year as a standard mileage deduction.

Come 2022, I sold the car for $4,000.   On Turbotax if you mark off you sold a car you previously used for business use, all hell breaks loose and it becomes impossible to figure out.

For starters it wants to know the Fair Market Value of the car when I put it into use 8 years after I bought it.  I came up with a guestimate for that as I have no way of knowing.  (I said $8K, though changing this number doesn't change any of my results.)

Apparently, I'm supposed to go back for years 2018-2021 and "recapture" a portion of the mileage I wrote off.  I miraculously was able to dig up those numbers.  ($592).  The thing is, if I change this number up, it doesn't make any difference.  (I tried putting in $0 and it said I could claim a loss on the vehicle which didn't make much sense...)

I used my car for maybe 5% business use most years.  This last year I used it for 10% of the miles I drove as I sold it mid-year.  Turbo tax tells me "If the business use percentage varied over the life of the asset the program can't compute the sale information".  So then what the heck am I supposed to do!

Oddly, there is a question called "Did you track the miles you drove for personal stuff" which depending if I click Yes or No, changes the results dramatically.  (I know exactly how much I drove for business and roughly how much I drove for each year otherwise.)

So it estimates my car was used 7% for business and I sold it for $4,000 so my biz portion of the proceeds are $280.

One of the help boxes states "You must also report the sale of the other portion of the property in the appropriate section of the program."  But it doesn't say where that is?

None of this makes any sense and the turbotax instructions/guide/help are completely useless and nonsensical.  They really need to better explain these things.  There is no reason they couldn't.

Does anyone have a link to an explainer of how to account for selling a previously used vehicle that only took the standard mile deduction?

[ThomasM125]

You need to determine the cost of the vehicle for business purposes and subtract the depreciation equivalent of the mileage allowance you took over the years to arrive at the adjusted basis. Then, you subtract that amount from the portion of the sales proceeds that apply to the business use of the vehicle and that is your taxable gain or deductible loss.

Here are the depreciation equivalents that you multiply by the mileage you claimed each year to arrive at your depreciation amount:

So, basically you have to multiply the cost of the vehicle by the percentage of time you used it for business versus personal use  to arrive at the cost. Then subtract the depreciation from that to get the basis. Then multiply the sales proceeds by the business use percentage to get the business sales proceeds. Just enter those numbers in TurboTax when you go through the sales entries for the vehicle.

[MauryM]

But what if the business use percentage changed each year?  I drove a different number of miles each year depending on how much work my rental needed.

[ThomasM125]

I think you are asking what percentage of use to use to determine the business portion of the vehicle cost and sale proceeds.  You would have to add up each years percentage of use and divide it by the total number of years to determine an average percentage of use, or some similar averaging method.  

[MauryM]

Yeah, that's what I was afraid of... ha!  I try to put a good faith effort into all this stuff, but when you spend an entire day trying to figure out some of these things only to have it affect your taxes by a few bucks it's pretty frustrating.  Appreciate your take on things.

[MauryM]

So I'm a little confused still I think...

I never wrote off anything but the standard mileage deduction each year.  (In other words, I never captured any depreciation for my car.  I just multiplied miles driven by the rate each year and wrote that off.)

So when I sell my car, do I need to do anything?  Perhaps recapture a portion of the mileage?

Seems weird I'd have to recapture any of the sale price of the car when I never wrote off any of the purchase price...

[MauryM]

Still a bit confused as Turbotax is awful at clarifying this stuff.

When I'm working through the worksheet and I go to report "vehicle cost" is that the cost of the Vehicle, or just the business portion of the vehicle.

In other words, if I bought a car for $8K and only used it 7% for business would my "vehicle cost" be $8000 or $560?

(The text of the question is as follows in the interview)

Since you didn't claim depreciation for this vehicle, we'll also need the vehicle's total coast.  The cost would normally be the purchase price (learn more)

If you do not immediately use the vehicle for business, the cost will generally be the Fair market value of the vehicle at the time you placed it into service.

Vehicle Total Cost:  ?

[DoninGA]

@MauryM The cost of the vehicle is the total you paid the dealer or the private party to purchase the vehicle.

If you did not immediately start using the vehicle in your business, then it is the fair market value of the vehicle on the date it was placed in service, eg.  Total cost of vehicle when purchased $10,000.  Placed in service one year after purchase, FMV is $8,000.