Deprecation Report Adjustment

[Molytruck]

Hello, I sold an asset in early 2023, but TurboTax still uses the full year for the accumulated depreciation even when I entered the sale date of 02/24/2023. Is there a way to make this adjustment.? Bought for $7000, sold for $2500. TurboTax is reporting a Gain of $2500 with a full depreciation of $7000. 

Thanks in advance.

[DianeW777]

It depends on the date acquired, however I will provide some information and you can update if you have additional questions.

1. If you placed an asset in service and out of service the same year you are not allowed to depreciate it. You would report only the sale.
2. If you had the asset before 2023, depending on when it was placed in service for business, it sounds like you have completed the sale appropriately in the asset itself. It sounds to me like the asset was already fully depreciated before 2023 which would create a full taxable gain of the selling price, $2,500.  This would be ordinary income because you are recapturing the depreciation expense used in the past to the extent of the gain on the sale ($2,500 in your situation).

[Molytruck]

Thanks for your quick response. I bought the vehicle in July 2017.  At the end of 2023, the final depreciation would have been $403. I was under the impression that the since I sold it in February 2023, I wouldn't report the full $403. 

[DianeW777 · Accepted solution]

It should be a half year amount in the year removed from service if the useful life/recovery period had not yet expired. A vehicle has a three year life so it seems your chose to use a longer recovery period. You could certainly have some depreciation in 2023, because based on the date of purchase or placed in service, it would have been set up on a half year (HY) convention. This means you would get a half year for the year placed in service and a half year for the year removed from service.  

There may have been little to no limitations for this vehicle since the cost was lower than the average vehicle these days and it's important to account for any personal use portion, if any.

The business miles for all year divided by the total miles for all years is the calculation for the business uses percentage. If it was fully used for business then there's nothing to do for any personal portion of sale.

@Molytruck 

[Molytruck]

Thank you, I will just leave as-is, not worth the headache.