Sold vehicle used for multiple rental properties.

Forum|Forum|2 years ago
February 21, 2024
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I used the same car for 2 rental properties. I always use the standard mileage deduction in the previous years tax returns on Sch E. In 2023, I sold that car.

In Turbotax, for EACH rental property:

1. I selected 'I stopped using this vehicle in 2023'

2. Entered the appropriate sales price (business portion)

3. Entered vehicle total fair market value when it was placed in service

4. Entered prior depreciation equivalent

Then turbotax filled the information on the Form 4797 (Sales of Business Property), however, I found the sales of this vehicle was reported twice (one for the first rental--sales gain, the other for the second rental--sales loss) as if turbotax treated the same vehicle as a different one for each property.

Is this fine? Can the sales of this vehicle be reported twice on the same form？

I am confused. Please help.

Best answer by DianeW777

When you enter the sale, first know that you are to use the actual cost of the vehicle, not the fair market value when you began using it in business.

Total miles driven for the life of the vehicle (rental and personal combined from the date you acquired it)
Total rental miles for all rental use all years (both rental 1 and 2)
Divide number 2 total by number 1 above total to arrive at the business use percentage.
Take the actual cost of the vehicle and multiply by number 3 above - this equals your cost basis
Take the sales price ($8,000 x the percentage you calculated in number 3 above = this equals your selling price
Use the chart to arrive at the depreciation portion of the standard mileage rate then take that rate times the business miles for each year of use for both rentals
Add all years of depreciation together and this will be the amount to enter in the Depreciation slot.

Please update here if you have more questions.

@manbeing

DianeW777

Yes, my advice is to say the vehicle was removed from service and then do not indicate it was sold or say 'Yes' it was converted to personal use. This takes care of the vehicle in the rental section(s). This will eliminate any sales information in the vehicle itself. Next you will enter the sale one time using the steps below.

Calculate the standard mileage rate depreciation portion for the business miles each year (see chart below)
Go to Less Common Business Situations
Scroll to Sale of Business Property
On the next screen select Any Other Property Sale
Use the information from step one and the depreciation from step 1 to complete your sale
If the personal portion of your vehicle is a loss there is nothing to report for that portion of the sale/trade.

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manbeingAuthor

Employee

@DianeW777

Turbotax still asked me about the vehicle total cost (fair market value) when I placed it in business service.

Suppose the FMV of the vehicle in service for rental 1 was $40,000, and the FMV of the same vehicle in service for rental 2 was $30,000

Should I enter:
vehicle FMV for rental 1 = $40,000 *50% = $20,000
or
$40,000 * 50% * 13.5% (2023 business portion) = $2,700 ?

DianeW777

You should enter the business use percentage of the vehicle fair market value (FMV) in each rental activity based on the business miles and total miles of the vehicle for each rental.

Example: Total miles 10,000 | Business miles rental 1 = 2000 | 2,000/10,000 =20%
| Business miles rental 2 = 3,000 | 3,000/10,000 = 30%

@manbeing

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