Depreciation

Forum|Forum|2 years ago
February 13, 2024
2 replies
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Purchased a vehicle in 2021 for $32,000. Used it for my business from 12/4/2021 until I sold it in April 2023. I fully depreciated it in 2022. I sold it for $10,000 because it had a blown motor. Can I claim the loss in 2023?

Mike9241

since you fully depreciated it in 2022 you have a tax basis of zero for which you have received $10K so you have a taxable gain - section 1245 or 179 recapture.

cforrester99Author

Employee

But can I claim a loss since the engine was blown.

DawnC

Employee

No, the vehicle, including the engine, has a $0 book value now, so any income from the vehicle is a gain.

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AmeliesUncle

@cforrester99 wrote:
Used it for my business from 12/4/2021 until I sold it in April 2023. I fully depreciated it in 2022.

Can you clarify that? Did you mean you fully depreciated it in 2021? It would be extremely usual if it was fully depreciated in 2022. Did you use the Standard Mileage Rate or use Actual Expenses?

As the others noted, if your vehicle was fully depreciated, for tax purposes your vehicle Basis (similar to cost) was $0. That means the entire sale price of $10,000 is a GAIN, not a loss, and is fully taxable.