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sportsduck
New Member

Writing Off Car Accident from Part Time Ridesharing

I drive for a timeshare on the side. In November I had a car accident and the car was deemed as totaled. I received a payout on the car which was about $5000 more than what I owed, which was then used towards the purchase of a car which I have not driven yet for the timeshare since I'm on disability. How do I handle this? In TurboTax 2019 I mark the car as not being used from the date of the accident and the system is asking for the Sales Price (Business Portion) and the Expense of Sale (Business Portion). Is the Sales price what I got back from the insurance company and the expense what I owed to the bank?

 

I am also getting asked the Prior Depreciation Equivalent and the AMT Prior Depreciation Equivalent even though I previously used the standard deduction.

 

I have no idea what to put in here. Since I have not driven since the accident am I better off indicating I drove the car all of 2019, or if I do that am I going to have the same problem in 2020 when I restart?

 

Thank you for your help!

3 Replies
Hal_Al
Level 15

Writing Off Car Accident from Part Time Ridesharing

You will probably need to have your taxes done professionally this year.  You need to know what your doing to enter all this in TurboTax.

 

That said, for simplicity, you could just ignore it.  Yes,  you are better off indicating you drove the car all of 2019, and just enter your business mileage, as usual. 

 

If you decide to go ahead:  

Yes, the sales price is what the insurance co. paid you (times the business %). 

No, expenses are not what you owed the bank.  Loan balance is irrelevant.  You most likely had no expenses of sale, so enter 0.

You say you  used the standard deduction.  Do, you mean you used the standard mileage allowance and did not claim any depreciation?  The "standard deduction" is a personal allowance  and not related to your business use of the car.  Technically, the standard mileage rate includes an amount for depreciation.  But the "loss" on the sale (or disposal in the case of being totaled) is usually so large that depreciation recapture is not required. 

For 2020, ignore the old car, and start fresh with your new car.

sportsduck
New Member

Writing Off Car Accident from Part Time Ridesharing

Thanks for your input @Hal_Al. Your assumption is correct, I meant the standard mileage allowance.

 

So if I decide to ignore it, will I have the same problem when I file 2020 taxes since I would need to show what happened to the car? 

 

And if I decide to go through with it, what is the gain or loss basis? For example, if I bought the car for $20,000 and it valued at $14,000. I'm assuming I can skip this but want to get a second opinion.

 

Thank you again for your help.

Hal_Al
Level 15

Writing Off Car Accident from Part Time Ridesharing

Q. "So if I decide to ignore it, will I have the same problem when I file 2020 taxes since I would need to show what happened to the car? "

 

A. No, just delete it.

 

Q. "If I decide to go through with it, what is the gain or loss basis? For example, if I bought the car for $20,000 and it valued at $14,000."

A. Your cost basis is $20,000 minus the depreciation portion of the mileage allowance (26 cents in 2019). That's why there's seldom any capital gain or depreciation recapture, when a vehicle is sold or disposed. 

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