Selling a car used for business

Follow these steps:

1. Your personal car had depreciated in value when you started using it for work.
2. Determine the FMV, fair market value, when you began using it for business.
3. Use your FMV minus depreciation due to business use.
   1. If you used actual expenses, you can add the total depreciation taken each year.
   2. If you took the standard deduction, part of it was considered depreciation. For 2020, it was 27 cents per mile driven. For 2019, 26 cents per mile. For 2017 and 2018, 25 cents per mile, 2016 was 19 cents per mile. You can google  IRS mileage depreciation if you need more years.
4. Mark your car as disposed of during the year, as a sale.
5. The sales price will be the price you sold the car.
6. The basis, step 3, FMV-depreciation
7.  The business gain or loss will be calculated at the percent business use, which is 4/111 =3.6% business use. 

For example:

Car depreciated value of $10,000 when placed in use for business.

Drove 4,000 miles at 27 cents per mile, depreciation of $1,080.

Basis in vehicle is $10,000 -$1,080 =$8,200

• Sell the car for $8,000, you have a loss.
• Sell the car for $9,000, you have a gain.
  • Gain of $800 x 3.6% business use = $29 gain on business vehicle