Stopped business vehicle use. Spouse using for business now.

[grizz2]

I was using a vehicle for business but my husband is now using this vehicle for business. It was not converted to 100% personal use, sold or given away as a gift.  How do I account for this in TurboTax? 

[Critter-3]

Ok... if you each have your own Sch C businesses and you stopped using the car for business then you DID convert it to personal use even if it was just for a moment.   Then the spouse started using it for  business so they will add the auto on their Sch C.  

[grizz2]

Thank you! So helpful!

[KrisD15 · Accepted solution]

You can report that you "sold" it to your husband's business. 

Enter the Fair Market Value as the selling price. 

This Fair Market Value will be the basis for the business vehicle for your husband's business. 

When you report this disposition of your business vehicle, you will (or rather the program will do it for you) subtract your adjusted basis from the Fair Market Value. Your "Adjusted Basis" is your original basis less depreciation claimed. 

If that results in "depreciation recapture" you will need to claim that amount as other income on your 1040 (personal income). 

Or, Yes, as Critter-3 says, you can also convert  it, then reassign it. 

That way you would be liable for recapturing the 179 deduction and or bonus deduction, but the other depreciating would continue with the vehicle.

Your husband would need to subtract your remaining depreciation from his basis in the vehicle.

@grizz2

[Edited 03/21/2022 I 5:29pm PST]

[grizz2]

So in the section for figuring out the value of that vehicle under my husband's business, will he be using the current fair market value ("purchase price") when asked "what did you pay?"

Will he be using that same value in the next question "What was the value of your vehicle on the date you started using it for business?"

[JamesG1]

You are correct. 

Under the 'sold' option, you will report the same value:

• on your tax return as your selling price.
• as the current market value (purchase price) on your spouse's tax return, and
• as the value of your vehicle on the date you started using it for business on your spouse's tax return.

For instances vehicle 'sold' on tax return 1

Sold                       $5,000

Adjusted basis       $4,900

Gain                      $100

For instances vehicle 'bought' on tax return 2

Purchase price       $5,000

[grizz2]

Thank you! What date would we enter for "the day you became owner of this vehicle"? Would it be the day "we" bought it (2014) or the day my husband "bought" it (i.e., the day I stopped using it for my business and he started using it for his)?

[ZoltanB45]

The day it was bought, would be the day your husband took it over.

[Critter-3]

And the cost basis of the auto is your ending adjusted basis not what you paid for the car originally.   If you have been depreciating the car this is an easy figure to find   but if you have been using the standard deduction you will have to do some math.

[grizz2]

Where do I subtract the remaining depreciation (from my business use) from his basis of the vehicle?

Also, The car has been in use for business for 8 years. Shouldn't it stop depreciating? 

[ZoltanB45]

It would have been fully depreciated so there is no basis remaining at the time of sale. Unless the one spouse is recording that he purchased it from her for a price, he too would no longer be able to depreciate the vehicle.

[grizz2]

How do I let TurboTax know that the car was previously depreciated?

Car was purchased in 2014. I used it for business from then until Jan 2021.  I entered prior depreciation equivalent based on standard mileage rate on my return.

Now my husband starting using this car in Jan 2021 for business (using actual expenses). On his return, I went into the car worksheet and entered that prior depreciation number in line 37 but TT is flagging it as an error.  What am I doing wrong? 

Where it asks for the day you became owner (my husband) of this vehicle are we entering the date of purchase (2014) or 1/8/21, the day he began business use?

[PatriciaV]

How is TurboTax flagging your prior depreciation entry as an error? If you are in Forms mode, click the Errors icon above the left column to show the error description below the form.

For the question about when you became an owner, use the date you purchased the vehicle.

If the vehicle was fully depreciated when you again began using it for business, you won't have any depreciation expense going forward.

[grizz2]

It says prior depreciation should be blank.

[PatriciaV]

What dates did you enter for 1) date you acquired the vehicle and 2) date the vehicle was placed in service (started using it for this business)? What was your answer to the question about the standard mileage rate used in the past?