Bought a vehicle at the end of 2021 and sold it later in 2022 for a loss how does this work out?

Forum|Forum|3 years ago
February 16, 2023
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I bought a vehicle for business use at the end of 2021 for $51,400. I put 18000 miles on the vehicle in about 5 months and sold it after 6 months to a dealer. I sold the vehicle for $32,000 to a dealer ship. so I've taken a $19,400 loss. The business only made $34,000. After taking that loss and all the other expenses and insurance that I paid for to operate this business I probably only profited about $11,000.

turbo tax is asking me for the basis gain loss and depreciation equivalent and I'm not sure how to answer these questions properly. Can anyone help?

DaveF1006

Your cost basis is the vehicle's original cost, plus improvements, minus all your annual depreciation deductions. You need to figure out your depreciation deduction (equivalent). Please look at publication 463 page 24 for the mileage rate for determining the depreciation deduction. For 2021 & 2022, it is .26. Armed with this knowledge here is how you will determine your depreciation.

If in 2021, you claimed 5000 business miles (just placed this amount for illustrative purposes). You multiply 5000 X .26=1300. If you drove 10,000 in 2022, it is 2600. Add 2600 to 1300= 3900 and this is your depreciation deduction or equivalent you will use.

Hope this helps!!

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