My car used for business was totaled. TT is asks what the "sales price" was. Received an insurance settlement. Do I report the settlement amount as the "sales price"?

[britots]

The car was a 13-year-old VW Jetta which I have used for business (client meetings, errands) since I acquired it new. I did not sell the car, but did receive an insurance settlement after it was totaled. I used the insurance settlement as a down payment on a new car which I am also using occasionally for business (and have entered the info for that car in Turbo Tax). Turbo Tax asks what the "sales price" was of the old car. Reading some of the responses to similar questions, it appears I would also need to provide the original purchase price of the totaled car. As this happened a year ago, I no longer have any records on that car (didn't realize I'd need that info for my taxes), although I do have a good estimate of what I paid for it.

[PatriciaV · Accepted solution]

Yes, if you received an insurance settlement for the vehicle you no longer use for business, the amount of the settlement would be considered the "sales price" of the old car.

If you don't have the original purchase documents for the vehicle, you might check your copy of the first tax return where you claimed the business use of the car. The workpapers should contain the purchase price you entered for the vehicle that year.

[britots]

I did actually still have my 2003 tax return files, but there is nothing in them with the price of the car. My accountant at the time just listed the business miles for each of the 2 cars I used in 2003 times the standard mileage rate for that year. Not on the return itself or any of her worksheets. Should I just estimate it? I know what the thousands were, just not hundreds or cents... Considering the age of the car, I would imagine it was mostly depreciated...

[PatriciaV]

Yes, your best estimate will be fine.

[britots]

Thanks!

[Grimes_MG]

What about if you still had a loan on the car that was totaled? My car was deemed "totaled" and I received a settlement from the party-at-fault's insurance company. I then took the settlement and payed the remaining loan amount which left me a little less than 1/4 of the total amount. I then took that 1/4 and bought a used car for my business. How do I report that instance? Do I only report the 1/4 amount since I really didn't realize the entire payoff since I owed money to the bank?

[Opus 17]

---

@Grimes_MG wrote:

What about if you still had a loan on the car that was totaled? My car was deemed "totaled" and I received a settlement from the party-at-fault's insurance company. I then took the settlement and payed the remaining loan amount which left me a little less than 1/4 of the total amount. I then took that 1/4 and bought a used car for my business. How do I report that instance? Do I only report the 1/4 amount since I really didn't realize the entire payoff since I owed money to the bank?

---

No, your sales price is what the insurance company paid for the car, it's value, even if the money was paid to the lien holder.   Just as if you had sold the car in good condition to a buyer, you report the sales price.  The fact that you owed on the loan doesn't change the business calculation.