Depreciation Recapture

[bullybear87]

This is for 1120S. The original cost basis of the vehicle was $35,000 in 2018. In that year section 179 and bonus depreciation was used in the amount of $18,000. Safe harbor was not elected in the subsequent years and therefore no further expensing/deductions were used. In 2022 the vehicle was replaced with another vehicle. $23,000 was received. Is it correct that the corporation needs to recognize a gain of $6000 on the return for 2022?

Thanks for your help!

[RobertB4444]

Yes.  The cost basis of the car is $17,000 so if you sold it for $23,000 then you need to recognize a gain of $6000.

However, if you are carrying the car at a value of 50% on your books then it shows as 50% business usage and you depreciated 50% of the cost then 50% of the sale price is a gain.  

@bullybear87