Why is Turbo Tax calculating my capital gains on the sales of a business van as the sale price $46,000. I calculate it as $11990.

Forum|Forum|3 years ago
April 29, 2023
2 replies
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My figures
Sale price                     46,000
Purchase price             41,000
Profit                               5,000
Depreciation 2021       6,600
Depreciation 2022           390
I would calculate Capital Gains 5,000 + 6,600 + 390= $11,990
Turbo Tax calculation $46,000
Is my calculation of the Capital Gains correct?

TurboTax Self Employed Online

Mike9241

look over the 2021 return to make sure you didn't take 100% of the cost as depreciation in 2021. that's what Turbotax is indicating by reporting the proceeds as the gain. we can't see your returns and 6600 looks low unless there was substantial personal use. look at form 4562 for 2021.

depreciation recapture is not capital gain but ordinary income that would show up on form 4797. only $5000 would be capital gain but the van would have had to been held for over 1 year.

cifizzariAuthor

I looked at my 2021 return. We claimed 25,445 miles, so we did not take 100% depreciation.

I calculated the depreciation for 2021 as 25,445 * .26 = 6615.70

We had no personal use of this van.

We owned the van for 13 months.

AmeliesUncle

Yes, the total gain would be $11,990.

It was 100% business for both years? Are you sure you used the Standard Mileage Rate in 2021? If so, I'm not sure why TurboTax is coming up with the full sale price as the gain. You may want to review all of the vehicle questions, in case you entered something incorrectly (such as saying you used Actual Expenses the first year, and used Bonus depreciation or Section 179 to claim the full cost of the vehicle).