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wcooperiv
Level 1

Stopped Using Vehicle for Business

I stopped using my personal vehicle for business use last year.  I had NO business use at all in 2019. I did have previous years where I deducted depreciation but all use for all years was less than 50% (no MACRS used). I owned the car and sold it in 2019.  Do I need to worry about Depreciation Recapture?

9 Replies
KathrynG3
Employee Tax Expert

Stopped Using Vehicle for Business

The best practice would be to dispose of the asset when you are no longer using it. 

 

To do this in TurboTax,

  • from the left menu, select Federal>
  • Income & Expenses>
  • Self-Employment Income & Expense click Revisit>
  • Pick your business and click Edit>
  • Scroll down to the expenses to Vehicle and click Edit
  • On the Vehicle Summary, next to the vehicle, click Edit
  • Check the box for I stopped using this vehicle in 2019

 

 

wcooperiv
Level 1

Stopped Using Vehicle for Business

I did this step.  Its a little foggy as to whether depreciation capture is required.  Turbotax didn't show any and didn't create any new forms.  I used my personal car for less than 50% for about 4 years.  I didn't use it at all in 2019.  All previous depreciation was "straight-line depreciation". I assume no recapture is required for assets that were straight-line depreciated with less than 50% use for the life of the asset.  Is this correct?

DMarkM1
Employee Tax Expert

Stopped Using Vehicle for Business

You are correct.  The recapture rules do not apply to property that has been depreciated using straight-line depreciation from the date it was placed in service.

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Kingman1876
New Member

Stopped Using Vehicle for Business

We sold a family vehicle we have been using for in-home health services since 2012.  We have claimed mileage each year which is typically 65-80% of the total miles.  I'm not clear on how to handle this.  I am in the process of entering information into Turbotax.  We bought it in 2012 for 30,500.  Sold it in 2019 for 12,000.  Not sure what the Basis for gain/loss is.

JulieS
Expert Alumni

Stopped Using Vehicle for Business

If you have been using TurboTax for a few years, part of your information will be in the program. Use Kathryn's instructions above to report the sale.

 

You will need to calculate the amount of depreciation or depreciation equivalent taken during the years of business use. 

 

If you used actual expenses, just add up the amount of depreciation that was taken on your past tax returns. If you took the standard mileage deduction, your business miles should be multiplied by the depreciation equivalent for the year. 

 

2012 - .23

2013 - .23

2014 - .22

2015 - .24

2016 - .24

2017 - .25

2018 - .25

2019 - .26

 

For instance if you claimed 1000 miles in 2012 - .23 x 1000 = $230.00 in depreciation for 2012. 

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johns5
New Member

Stopped Using Vehicle for Business

This is the 1st year i've used turbotax.

  • we've used a personal vehicle for contract since ~2 years after purchase (about 1-2% business)
  • we've claimed the standard mileage deduction every year since purchased
  • the car was traded in near the end of 2019 (business usage was about 1.7% through that time)

Disposing of Asset is requiring quite a bit of information for a very small deduction, but also want to make sure i'm doing this correctly. Your instructions stop at the 1st step.

 

what i've done

  • added the business mileage for this vehicle for this year, and indicated we stopped using the vehicle in 2019
  • Entered total mileage for that vehicle for the year and business miles
  • At the prompt, no additional expenses for that vehicle are (parking, tolls, transportation to work, property taxes, interest). none entered
  • Turbotax indicated: "Because you stopped using this vehicle for this business in 2019, we need to know the business portion of the sales price you received for this vehicle and any expenses of sale, such as advertising or commissions."  I've entered that. 
  • Turbotax: "Since you didn't claim depreciation for this vehicle, we'll also need the vehicle's total cost. The would normally be the purchase price" I've estimated that, but need to revise
  • Turbotax: Calculate depreciation equivalent "Enter the depreciation equivalent of our standard mileage for the years before 2019.   asking for : Prior Depreciation Equivalent and AMT Prior Depreciation Equivalent (I'm currently looking up yearly mileage from the year started using the vehicle for business)

Questions:

What needs to be entered here? It's likely when i get past this question, I will come back with more questions.

 

We also have a new vehicle purchased near the end of the year, which was only used for one job (low miles)

My thought is to put the new vehicle into service beginning in 2020, or do i add it for 2019?

 

DawnC
Employee Tax Expert

Stopped Using Vehicle for Business

Since you took the standard mileage deduction, your business miles should be multiplied by the depreciation equivalent for the year.   The standard mileage rate includes depreciation, so when asked about the depreciation you took, it should be the same as the depreciation equivalent that you should have taken.   See below for the amounts (the equivalent) of depreciation that is included in the standard mileage rate.

 

2012 - .23

2013 - .23

2014 - .22

2015 - .24

2016 - .24

2017 - .25

2018 - .25

2019 - .26

 

For instance if you claimed 1000 miles in 2012 - .23 x 1000 = $230.00 in depreciation for 2012.  If you are going to claim the mileage on the new vehicle, it needs to be reported in 2019.    @johns5

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johns5
New Member

Stopped Using Vehicle for Business

what is the definition of these two items

  1. Prior Depreciation Equivalent
  2. AMT Prior Depreciation Equivalent 

I believe I understand what #1 is, it's the sum of the Previous Year's accumulated depreciation. In my case, the fraction (i.e .26 or .25, etc.) of the standard mileage amount through all previous years where the vehicle was used.

 

What is

 

AMT Prior Depreciation Equivalent ?  no idea what AMT refers to and why the amount might be different that 

#1 above?

 

johns5
New Member

Stopped Using Vehicle for Business

what is the definition of these two items

  1. Prior Depreciation Equivalent
  2. AMT Prior Depreciation Equivalent 

I believe I understand what #1 is, it's the sum of the Previous Year's accumulated depreciation. In my case, the fraction (i.e .26 or .25, etc.) of the standard mileage amount through all previous years where the vehicle was used.

 

What is

 

AMT Prior Depreciation Equivalent ?  no idea what AMT refers to and why the amount might be different that 

#1 above?

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