Question

Aug 2021 I started using 2017 car for biz.20,000 fair market value 85.89% biz frm 4562 lne 2 sect 179 $17,178 line 8,9,12 22 $8,761sch c lne 13 $8,761

Forum|Forum|3 years ago
November 29, 2022
1 reply
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Traded in jan 8, 2022 (used 100% biz)
Trade in $ 15,500
Will use actual method for first 8 days on trade. Do I take depreciation ?
And actual miles on new car
Will I owe anything on the depreciation reported in 2021?
I read about "recapture" & reporting ordinary income. But not sure if this applies.
If yes can you tell me how to calculate this # ?
Thank you

TurboTax Self Employed Online

A

AmeliesUncle

TurboTax is NOT set up for this situation.

What was the average business percentage from when you first started using it for business (August 2021) to when it was sold (January 2022)? In other words, total business miles (both years) divided by total miles (both years).

What was the average business percentage from when you first BOUGHT the vehicle to when it was sold (January 2022)? In other words, total business miles (both years) divided by total miles (ALL years that you owned it).

What was the cost of the vehicle (purchase price plus purchase fees)?

2

20jojo21Author

August 2021 to Jan 2022 86.5 % business

January 2017 to Jan 2022 9%

Purchase price $33,205.63

Thank you for your help.

A

AmeliesUncle

FMV $20,000 x 86.5% = $17,300

Depreciation $8761

Business Basis $17,300 - $8761 = $8539

Sale $15,500 x 86.5% = $13,408

$13,408 minus $8539 = $4868

Is that a LOSS? No. Go to the next step.

Purchase price $33,205.63 x 9% = $2989

Depreciation $8761

Business Basis = $0 (Basis can't go below zero)

Sale $15,500 x 9% = $1395

You have a $1395 taxable gain.

In the vehicle section, say you converted it to personal use, then report the sale using the manual calculations in the "Sale of Business Property" section.