In 2020 I converted a vehicle from business use to personal use (my wife now drives it exclusively for personal use). I have only used standard mileage deduction in the past, and % business use is well below 50% of total miles each year. Only one vehicle is used in my sole proprietorship for business purposes (and personal). I bought a new truck in 2020 and tracking business/personal miles.
However, there is conflicting advice between a response I received from Mike 9241 (level 6) on my earlier posted question and responses from Champ Carl (level 15) to similar questions.
Mike saiid the vehicle was deemed to have been sold when I converted it to personal use and need to go through recapture of the % for depreciation included in standard mileage deduction, FMV, gain/loss as if it had been sold. "converted to personal use. you are deemed to have sold the car at FMV on the date. The total FMV is divided split between the business FMV based on business mileage to total mileage as is the business portion of the cost. the rest of the FMV and cost is the personal portion which you can ignore." And goes on to provide the % depreciation used in standard business miles and how to calculate.
However Carl responded to a similar question as follows "If all you did was convert it to personal use, then you have nothing more to do at this time. You won't deal with depreciation recapture until the tax year you sell or trade in the car." Whenever it is sold, it is reported as a business sale on 1040 and depreciation recaptured at that time to determine gain/loss (which would include the calculation method Mike provided).
Can someone PLEASE confirm the correct way to handle in my 2020 return.?
When I finish entering total miles and business miles, I am shown the mileage deduction amount. But the next screen asks to check all boxes that apply:
You started to use it as a personal vehicle 100% at any point in 2020.
Your Business % use varied over the years.
You gave it away as a gift.
Or none of the above.
If I check "started to use 100% personal during 2020" the next screen says you "may" have to report in Sale of business property. Then it asks "Did you convert this asset to nonbusiness use?" If I say "No" the next screen asks for sale price! If I say "Yes" there are no more screens and assume I'm supposed to go to Sale of business property. There is NO place in the interview that say "this requires special handling" - and then report a sale in the future when it IS sold.
Thank you!!
ps If I choose "none of the above" from the prior screen it takes me to the same page asking for sale price.
