Sec 179 SUV Deduction Errors

[Dac410]

in 2018 I deducted an $87k Sec 179 SUV.  I traded it in Apr 2019 for a similar vehicle. When I work on my 2019 taxes, it imports the 2018 vehicle, and I enter the 2019 vehicle purchase, and edit the 2018 as sold. But an error pops up in smart check that line 7 on the Asset Entry Worksheet Sec 179 expense is too large. It is filled in with the purchase price of the 2018 vehicle that shows up in the 2018 tax return as the Sec 179 deduction.

Any ideas?

[MarilynG1]

What this means is that you have set the depreciation value to high in comparison to what the vehicle is worth. 

If you are using TurboTax Desktop, on the Vehicle Expenses Worksheet, Part VII, change the amounts on Line 46 to match what is shown on  Line 51 (screenshot). 

You will have a large gain on the Sale/Trade-in of your SUV that you claimed a 179 Deduction for in 2018 as a depreciation recapture. 

Since you have only used the vehicle for business for about a year, basically the difference between the Sale or Trade-In Amount you received and the 87K you originally claimed will be a Gain to you.

It's never a good idea to claim a 179 Deduction for a Business Vehicle if you don't use it for Business for the full five year depreciation period.

Click this link for info on how to handle the Sec 179 expense is too large error. 

[Dac410]

There is no Vehicle Expenses Worksheet, Part VII.

Should I enter the difference in what it was bought for and sold for in line 7 of Asset Entry Worksheet?

[MarilynG1]

Ok, the easiest thing to do would be to Delete that Asset Entry Worksheet from your return.

Business Vehicles should go on the Vehicle Expenses Worksheet.  

Then, in Business Expenses, enter the Vehicle in the Vehicle Expenses section.  You will be asked when you started using it for business, the Cost of the Vehicle, the FMV when you started using it, the Date you Stopped Using it, and current year expenses.

You will be asked Sales Price (trade-in amount received) and the Prior 179 Deduction Amt (screenshots).  

Hopefully this will eliminate your error.