Question

Car used for personal and business

Forum|Forum|7 years ago
June 6, 2019
1 reply
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I use my personal vehicle for buiness use when working on rental properties. Normally I deduct the number of miles driven (causually calculated by multiplying distance times number of trips) I traded in my vehicle for a new/used vehicle. In working on my taxes I seem to have gone down the 'like kind exchange' path. I've never declared my vehicles as being used for business other than the mileage. The like-kind exchange looks like it's inteded for business assets.
Should I skip the like kind exchange?

TurboTax Premier Online

DawnC0

Employee

No, do not skip the like-kind exchange questions. The trading in of your car is a like-kind exchange. This will remove the old car, replace it with the new car and carry your basis and depreciation to the new car. Generally, any taxable gain is deferred from a like-kind exchange. Depreciation is included in the standard mileage rate. See the screenshot below.

If you did not do a like-kind exchange, you would have to tell the IRS that you are no longer using the old car for business. You would have to report the disposition to calculate and recognize a gain or loss on the old car.

If you use the actual expense method to deduct your business driving, you calculate and separately deduct your depreciation deduction each year.
If you use the standard mileage rate, you get no separate deduction for depreciation because it is included in the standard rate. To determine how much depreciation you’ve taken, multiply the total business miles you drove the car by the amount of the standard mileage rate that accounts for depreciation.