Vehicle partially used for business since 2005 - always took standard mileage deduction

Forum|Forum|3 years ago
March 6, 2023
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I have a 2005 SUV that I've used part-time for business since 2005. I take the standard mileage deduction each year using the actual mileage, splitting it % wise between business and personal. The suv got a blown head gasket mid 2022. It's sitting in my front yard since then. I don't know if I will repair it, donate it or sell it for $1-2K. I had to buy a new truck.

TT is now trying to get me to calculate and pay back the depreciation of the old suv SINCE 2005. That doesn't seem right and if it is, that's a huge amount of money! Help!!!

TurboTax Home & Biz Windows

mglauner

Yes, if you have been claiming Standard Mileage, part of that deduction is depreciation.

Indicate in TurboTax that you 'stopped using the vehicle for business'. You can use a Sales Price of $0.

You will need to calculate the amount of Depreciation Taken, using the Depreciation Equivalent Tables.

Multiply the number of Business Miles you claimed each year by the amount shown for that year in the following table (page 24 in IRS Pub. 463) to determine your 'Prior Depreciation' amount to enter in TurboTax.

It is possible to have a Gain on the Sale/Disposition of a Business Vehicle, depending on how long it was used and % of Business Use.

Once you have determined the current cost basis of the vehicle (business portion of value when placed in service, less depreciation taken) and the Sales Price (if sold or traded in), TurboTax will calculate a Gain/Loss for you.

Click this link for more info on Disposition of a Business Vehicle.

@Katharine55

AmeliesUncle

@mglauner wrote:

Indicate in TurboTax that you 'stopped using the vehicle for business'. You can use a Sales Price of $0.

Absolutely DON'T enter a sales price of $0. Say you converted it to personal use.

If/when you sell it, you would report the sale in the "Sale of Business Property" section, using your MANUALLY calculated numbers. TurboTax is NOT set up reporting assets/vehicles that varied in business percentage, so you either need to manually do some calculations or go to a tax professional.

Katharine55Author

I'm trying to understand what they are trying to capture.

So, are you saying: If the suv's original purchase price of say $35K, then if the total depreciation from all 2005 to 2022 totals more than the $35K, that's what I have to pay tax on?

Also how can I value the car at 0 when I haven't done anything with it yet in 2023. Seems like this shouldn't even be calculated in 2022 until I really do dispose of or donate the suv.

Also, I don't know if I even have my returns back from 2005 to probably 2015 to figure out the mileage used in the early year returns.

Thanks for the further help.

AmeliesUncle

@Katharine55 wrote:
If the suv's original purchase price of say $35K, then if the total depreciation from all 2005 to 2022 totals more than the $35K, that's what I have to pay tax on?

Also how can I value the car at 0 when I haven't done anything with it yet in 2023. Seems like this shouldn't even be calculated in 2022 until I really do dispose of or donate the suv.

Also, I don't know if I even have my returns back from 2005 to probably 2015 to figure out the mileage used in the early year returns.

No, you don't need to pay tax on the excess depreciation.

You are correct; that is why my comment said to NOT enter a sales price of $0, but to say you converted it to personal use.

You need to find them. You are a business owner and are required to keep track of everything, incluiding depreciation details about the vehicle from many years ago.

Katharine55Author

Ok...just trying to comprehend with a clear understanding of the methods being used here to handle this matter.

Then, you are saying I use the irs formula times the mileage I took each year up to $35K for the years from 2005 until I reach the $35K (or whatever the original purchase price was). Let's say I reached the $35K in 2015. Then I would not be calculating depreciation for years past 2015...or does Turbo Tax automatically do this for me?