Question

Sold my semi truck after completed a 5 year lease purchase. How do I pay my taxes? Turbo tax won't bring up the options after I put in the vehicle was leased, but won't let me put in the correct info of when I became the owner if I put owned vehicle.

Forum|Forum|4 years ago
June 21, 2021
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Sold my semi truck after I completed a 5 year lease purchase. There was no buyout. They simply gave me the title. The same month I sold the truck and began driving for a local company. How do I pay my taxes on the sale of that truck? Turbo tax won't bring up the options after I put in the vehicle was leased, but won't let me put in the correct info of when I became the owner if I put owned vehicle because it says the ownership date must be prior to use date...but I used the truck for 5 years before becoming the owner and deducted the lease payment. Also how do I figure out the depreciation?

Not A Product Question

M

Mike9241

it would seem that you handled the lease-purchase incorrectly for tax purposes. The IRS treats a capital lease as a purchase for tax purposes. Payments (except for interest payments) are not deductible. Instead, the cost of the equipment is capitalized and depreciated over time. In many cases, the purchase may qualify for the enhanced IRC § 179 deduction and/or bonus depreciation.

thus the practical thing to do is

if you deducted 100% of the payments just report the sales proceeds as misc income on the same form where you deducted the payments. in effect, you wrote off the full cost so you have a basis of $0 and thus all the proceeds are gain taxed as ordinary income.

if you only deducted a portion of the payments then multiply the sales price by the business portion and report that as above.