Traded in SUV used for Business and Personal

[user17739571943]

Last year I traded in my 2022  SUV that used for business and personal use. I received $40000 trade in credit towards my new SUV that I started to use immediately for my business and personal use. I only use the SUV for business about 13% of the time. When filling out Turbo Tax for business in the vehicle section things got a little weird. The first part was easy, have stoped using the vehicle (Yes) The date I stopped and the mileage used for business. That all went great, then started it asking questions that couldn't figure out. I went  online but it seemed to me that  the Turbo Tax form  didn't match up with what they saying online. Turbo Tax has a series  four questions Sales Price, Vehicle Cost, Gain/Loss and finally Depreciation. I think I understand a couple of these but not all. Here are the numbers:  Original Purchase price of the vehicle that I traded in ($70,000). What the dealer gave me as trade in for my new vehicle ($40,000) Need help figuring out what enter especially the Gain/Loss part.

[DianeW777]

It depends. If you used only the standard mileage rate (SMR) or regular depreciation you will need the exact amount used. which would be only the business portion. Here are the steps to take to correctly enter your vehicle sale (trade in of a vehicle is a sale for IRS tax purposes). It's very difficult for tax software to handle this when there is varied business use from year to year.

1. Total all of the business miles for the life of the vehicle
2. Total all miles on the vehicle for the life of the vehicle
3. Business miles divided by total miles = Business Use Percentage for the life of the vehicle
4. Take the original cost of the vehicle x the business use percentage = Business Cost
5. Take the sales or trade-in price x the business use percentage = Business Sales Price
6. Calculate the following:
   1. If you used only SMR: all of the business miles by year with the rate in the SMR for depreciation (chart below) to arrive at the total depreciation considered used by the IRS; OR
   2. Total all of the actual depreciation expense used for the traded vehicle (see that information in the Vehicle screens)
7. When you go through the vehicle information 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.  This will eliminate any sales information in the vehicle it self and will eliminate this vehicle in 2026.
8. Once you have completed the information in that section you will follow the steps below to enter your sale:
   1. Go to Less Common Business Situations
   2. Scroll to Sale of  Business Property
   3. On the next screen select Any Other Property Sale
   4. Use the information from step 3, 4, 5 and the depreciation from step 6 to complete your sale
   5. Select Sales of business or rental property that you haven't already reported.
   6. Answer 'Yes' to Do all of the following apply...?
      1.  Description of the Property (Vehicle make/model/year)
      2. Sales Price/Sales Expenses 
      3. Date acquired and date sold
      4. Cost
      5. Depreciation
9. If the personal use portion of your vehicle is a loss there is nothing to report for that portion of the sale/trade. 

Annual Depreciation Component Breakdown (for more years see the chart in IRS Pub 463)

• 2025: $.33
• 2024: $.30
• 2023: $.28
• 2022: $.26
• 2021: $.26

This will complete your expense for this vehicle and the sale of this vehicle for 2025.

[user17739571943]

Thanks for all the information. Using your instruction I was able come with some Number for the Sales and Cost along with the Depreciation. Most of this was straight forward but still not sure of the definition of a cast or sale is.

I did plug the numbers into the turbo tax online section on sale of business property and came back as gain. Is that right. I only had the SUV for three years and seemed to me I shouldn't have to pay a gain on it. I still be doing something incorrect so here are the numbers,

Original Vehicle Price (including tax and title) $73814.00

Total Miles Driven  23924

Total Business Miles 3869

Using your formula I came up with 16%

Took the 16% x 73814 = $11810 (Cost or Sale?)

Took the 16% x $40000 (what the dealer gave me in trade) = $ 6400 (Cost or Sale?)

I figured the the Depreciation at around $1122

Can do tell me if my numbers look right and if so which is the cost  and which is the sale 

Thanks

[PatriciaV]

If you received less than your remaining basis (cost less depreciation), you should see a loss on the sale. In other words, you sold it for less than it was worth.

Cost / Basis = Your original cost (purchase price) x 16%

Sale / Proceeds = What you received from the dealer x 16%

See also: How do I enter the sale of a vehicle used for a business or rental property?