Calculation of Gain or Loss on Trade-In

[MaxRLC]

Follow up to previous post 

If the vehicle that was traded in was used only 31.2% for business during the time the car was owned and in service, how do you calculate the gain or loss?

Old Vehicle Original purchase price in 2015:  $23,500

Traded towards new vehicle in 2023 - trade in value received:  $2,500

Old vehicle was used approximately 31% for business use each year from 2015 through 2023. 

Do I take the original price ($23,500) and multiply by average business percentage (31%) to determine gain or loss?  Or, since it was not used 100% for business, is this calculation ignored?

Note:  No depreciation was taken - standard mileage rate used each year until 2023 (year vehicle was traded in). 

Thx in advance - 

[MaxRLC]

Haven't seen a reply - 

[Mike9241]

I did this in Turbotax

car cost $60K, 30% business use (tax basis for depreciation $18K), fully depreciated amount $18K  

trade in $30K which was entered as sales price. what I got was the wrong answer I believe.  $18K was treated as depreciation recapture but the difference between the trade-in value and the depreciation recapture $12K was treated as long term capital gain. it's as if the basis for the personal portion was zero. 

under a multiple asset theory (there is the business asset  - % used for business and the personal asset the remaining % then the trade -in value would be split based on business vs personal portion. in this case $9K would be treated as the sales price of the business portion resulting in $9K of depreciation recapture. the remaining $21K of trade-in value would be allocated to the tax basis in the personal portion or $42K. since this would be a loss, it's not deductible. - 

under the single asset concept there would be no gain or loss or even depreciation recapture

for example, say I bought a home for $60K took $18K in home office depreciation or depreciation on the portion that was rental before selling it for $20K

this would appear on schedule D as sales price $20K tax basis $42K adjustment to loss $20.  no taxable gain/loss - no depreciation recapture. there is no proration of the selling price between the portion that was personal, and the portion used for business/rental

I think the single asset concept is what the IRS prefers but can find no authoritative literature either way.