Trade in on Vehicle Used for Business at a Different % per Year

[kschoendorf1]

I have a vehicle used 4 years partially for business & was traded in on a new vehicle to use partially for business. The business usage varied per year. Even though I check the box the % are different over the years Turbo Tax is calculating the cost or other basis as the gain/loss basis times the current year business % which is a lot smaller than the average over the 4year term. How can you override what Turbo Tax is calculating for the cost or other basis? 

[DianeW777]

It depends. Entering the sale is shown below, including how to arrive at the depreciation when you use the standard mileage rate for a business vehicle. Enter any expenses for 2024. Use the information to arrive at the personal use percentage as well and if there is a gain it must be reported. If there is a loss, there is nothing to report.

The way to report the sale (trade is not really recognized by the IRS any longer for equipment or vehicles) is as follows. You have all the records so it should provide you the detail to move forward.

1. All business miles for all years and then total miles for all years - divide business miles by total miles to arrive at your overall business use percentage for the life of the vehicle. You will use this percentage times the selling price (or trade-in value) to arrive at the business selling price. Use the same percentage to arrive at your business portion of the cost before depreciation. 
2. You used the standard mileage rate and a portion of that rate represents depreciation. See the chart below to arrive at the depreciation portion for the business miles only. If you used actual expenses be sure to write down the total depreciation expense for prior and current year.
3. When you go through the vehicle information in your rental be sure to select 'Sold, disposed of, etc....' then do not indicate it was sold.  You must say 'Yes' it was converted to personal use and Yes Your percentage of business use of the vehicle varied over the years'. This will eliminate any sales information in the vehicle it self.
4. Once you have completed the information in that section you will follow the steps below to enter your sale:

Next enter your Sale of Business Property (do not enter any sales information in the vehicle asset)

1. Income at the top
2. Scroll down to Other Business Situations
3. Select Sale of Business Property
4. Select Sales of business or rental property that you haven't already reported.
5. Answer 'Yes' to Do all of the following apply...?
6. Enter your sales information, do not make an entry for depreciation (no zeros)
   1.  Description of the Property (Vehicle made/model/year)
   2. Sales Price/Sales Expenses (Trade amount)
   3. Date acquired and date sold
   4. Cost
   5. Depreciation