I gifted my car to my daughter a few years ago, and in 2021 she used it partially for business. She drove for a total of 3000 miles (500 miles for business 16.67%) and received a business expense deduction of $280. In May of 2022, the car was in an accident and totaled; she received a check for $9,856 from her insurance company.
Under sales price, I entered 1,643 “business portion” ($9,856 times 16.67%). I left blank the boxes for Vehicle cost and Basis for gain/loss. Now it shows that she has a gain of $1,643. Is that right? She took a $280 deduction last year and now has a gain of $1,643? In retrospect, would it have been better not to have partially used the car for business?
No. It is not right to leave blank the boxes for vehicle cost and basis for gain/loss.
The cost of your daughter’s car is either the business percentage of your cost or fair market value of the car when you gave it to your daughter.
It depends on whether there was an overall gain or loss.