In Sept 2020 I traded in a vehicle partially used for business, and the business use percentage varied from year to year. I used the standard business mileage rate expense each year I owned the vehicle, and I understand depreciation is included in that rate. I'm struggling with how to get the entries right in TurboTax for the sale of this vehicle--the calculations in the Car & Truck Worksheet and the numbers passed to Form 4797 don't seem to match what I think they should be based on the IRS instructions for Form 4797. TurboTax help says the program cannot automatically compute the sale information if the business use percentage has varied over the life of the asset. Any help navigating what to enter where would be appreciated.
The vehicle cost in 2010 was $26560. Using total business miles / total miles for the life of the car, business use was 23%. So business portion of cost is $6131. Adding up the depreciation in the mileage rate for all years 2010-2020, I get $5942. So adjusted basis is $189. Trade-in value in 2020 was $4200, so business portion is $970. I think ordinary gain on the sale is $970 - $189 = $781.
In the Car & Truck Worksheet, I put $26560 on line 33c for vehicle basis. I put $5754 on line 37 for prior depreciation (this was the total mileage rate depreciation for years 2010-2019). I put $970 in line 44 for business portion of sales price. I'm not sure what to put on line 49 for gain/loss basis, so I put $6131. The program calculates $4196 on line 51 for depreciation allowed or allowable (looks like it's based on MACRS 5 yr, SL, HY) and marks it as an error. In Form 4797 part III, the program calculates Line 21 cost or other basis is $969. Line 22 depreciation is $4196. Line 23 adjusted basis is ($3227). Line 24 total gain is $4197.
