Vehicle Stolen & Totaled - How to treat insurance payout?

[Steve4570]

Hi,

I bought a used truck in June, intending to use it primarily in my business.  My purchase price was $15,000, with additional licensing and taxes on top of that.  6 days after purchase and with under 150 miles I put on it, it was stolen.

It was recovered, but so badly damaged and contaminated with meth, the insurance company totaled it out.

Their payout was $27,334.83, which included their Actual Cash Value, taxes, title transfer, less my deductible.  I did use almost all of that to purchase a very similar condition & mileage, same model year, replacement truck (also used, not new).

I saw other community questions and answers, but am unclear how to treat this in turbo tax.

Do I say a placed the stolen truck in service for my business for the 6 days?  90 of the 150 miles was just getting it home from the city where I bought it, I used it twice for business for 40 miles, the other 20 miles were going to a shop to make an appt to have oil and other fluids changed, plus a trip to the licensing agency.  

I'm also unclear on my basis for the replacement truck - is it what I paid for the stolen one? 

Thanks in advance.

[Mike9241]

do you have an explanation of how you managed to purchase a vehicle that was worth $27K for$15K? just want to make sure you haven't omitted something important. if not your basis is the $15K paid + taxes. licensing would only be included if it was a one-time fee but most licensing is annual 

barring any missing info you sold the old vehicle to the insurance company for $27K so you now have about $12K taxable gain. your basis in the replacement vehicle is what you paid. 

[Steve4570]

I was as surprised as you, and even the agent managing the claim didn't realize it would be that much until they came back with the ACV calculation.  Private party sale, outside of the metro area, were both probably factors.

Is the business vehicle section the place where I would record the info about the stolen truck?

[Mike9241]

I assume you used it in your sole proprietorship or single-member LLC. in TurboTax there an asset entry worksheet as you go through the schedule C entries specifically for vehicles. that's where it's entered. 

if all use was business use then report it on the business. the gain will flow to form 4797 and from there to schedule 1. this will allow you to take a deduction for the business portion of expenses such as gas, insurance whatever. note that no depreciation is allowed because the vehicle was acquired and disposed of in the same year. 

if part business and part personal use based on business miles to total miles you enter the full cost in the business section but only the portion of the sales price (insurance proceeds excluding license reimbursement) that's in the same ratio. also enter the mileage info. so say 2/3 business mileage. Turbotax will prorate the business cost to $10K you'll report sales proceeds of around $18K resulting in a business gain of $8K. this will work just like above.

Turbotax will not automatically do the personal portion. that goes on form 8949 as a short-term capital gain type C not reported on 1099-b you'll report the personal portion here which would be proceeds of about $9K and cost of $5K resulting in a gain of $4K