Vehicle for Business

Forum|Forum|3 years ago
April 18, 2023
1 reply
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We have a car that was being used for my husband's business but I own the car and it's in my name. We bought a new car last year that I use exclusively. My husband's business paid me for the old car that is now in his name and he uses it for his business exclusively now. Am I able to deduct the cost of him buying the car from me on his business taxes? This car has been associated with his business every year and we have been using the standard mileage deduction for it.

mglauner

If he has been claiming the Standard Mileage deduction every year for the vehicle, he would have to indicate that he sold the Business Vehicle and for how much.

Part of the Standard Mileage Deduction is depreciation (about .25/mi.). He would add up all his Business Miles and report the sale of the vehicle, using the undepreciated basis as Cost Basis.

Let's say he originally reported the Cost of the Vehicle at 10K when he first started using it. His Business Miles add up to 5K, so he has claimed $1,250 in Depreciation. The current cost basis of the vehicle is now 10K - $1,250, or $8,750. If he sold it to you for 5K, he has a Loss of $3,750 to report on his Schedule C.

He can now set up another vehicle (Valued at $8,750) and begin claiming Standard Mileage on it.

@zzubzzub