Stopped Using Vehicle for Business and sold it.

[Jessc327]

My father gave me his truck (for free) in July 2019. I used it for mainly self employed business purposes (construction... occasional personal use though I had an alternate vehicle for personal use) and claimed standard mileage deduction in 2019 & 2020. I stopped doing business in Sept 2021. I sold the truck in Sept 2021 for $100 (the engine went bad). I have NO IDEA how to fill out the depreciation sections on my tax return. I'm not trying to claim a lost, I have zero problem with the $100 gain being reported. I tried just putting the $100 gain and putting zero's for the depreciation sections, but once it gets to the Federal Review it said i have to select something for MARCs and i click "Not applicable" then it says "Recovery Period" must be entered and I have no idea what that means or what to put! Do I need to change my original zero's or something? Please Help! :-(.

[ColeenD3]

You have $0 basis in the truck since it was a gift and you did not purchase it. Even though you did not depreciate the truck and used standard mileage, you still have to include the depreciation component of standard mileage.

Yes, when you are selling or trading in a business vehicle, you must adjust your adjusted basis for depreciation allowed or allowable and if you used the standard mileage rate, you must adjust the basis for the allocation depreciation amount per mile for all business mileage deducted.

Depreciation component of standard mileage rate.

For computing the taxpayer’s basis in an automobile, the standard mileage rate has a component that represents depreciation.

For 2021, the depreciation component is 26¢ per mile.

If the actual expense method is used in any year after the standard mileage rate method has been used, the straight-line method of depreciation must be used. (Rev. Proc. 2004-64)

Depreciation Component of the Standard Mileage RateYear.....................2020..........2019..........2018..........2017..........2016

Rate per mile................27¢............26¢...........25¢............25¢............24

Please see this LINK for more information.