Sell of business vehicle

The $4,900 in new motor and transmission expense gets added to your original cost of $7,000.  When you sell a business vehicle for which you took the Standard Mileage rate in lieu of depreciation, you must calculate a depreciation adjustment when accounting for the sale on your tax return.  For 2022, the depreciation adjustment is 26 cents.  For all other years, refer to the following chart.

IRS Publication 463 provides a good example of how to apply the depreciation adjustment to the sale of a business vehicle.

Example. In 2016, you bought and placed in service a car for exclusive use in your business. The car cost $25,500. From 2016 through 2021, you used the standard mileage rate to figure your car expense deduction. You drove your car 14,100 miles in 2016, 16,300 miles in 2017, 15,600 miles in 2018, 16,700 miles in 2019, 15,100 miles in 2020, and 14,900 miles in 2021. The depreciation portion of your car expense deduction is figured as follows. Year Miles x Rate Depreciation 2016 14,100 × $0.24 $3,384 2017 16,300 × 0.25 4,075 2018 15,600 × 0.25 3,900 2019 16,700 × 0.26 4,342 2020 15,100 × 0.27 4,077 2021 14,900 × 0.26 3,874 Total depreciation $23,652 At the end of 2021, your adjusted basis in the car is $1,848 ($25,500 − $23,652).

When you are ready to enter your information into TurboTax, sign in to your account.  In the search tool, enter sale of business property.  Select the jump-to link.  On the screen Any Other Property Sales? select the first option (Sales of business property or rental property that you haven't already reported).  Enter your information on the following screens.  

Whether your sale results in a gain or loss, such gain/loss will be reported on Form 4797, Sale of Business Property. 

Here is a link to IRS Publication 463:  IRS Publication 463

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