How does selling my work vehicle for business purposes affect my taxes?

This is a common situation when closing down a business with assets. Since your vehicle was used 100% for business, you need to understand how depreciation affects your basis. When you purchased the SUV for $62k, that became your initial basis. However, during those 7 months, you should have been taking depreciation on the vehicle (even if you didn't actually claim it on your taxes, you're required to reduce your basis by the "allowed or allowable" depreciation). For a vehicle used 100% for business, you'd typically use MACRS depreciation tables. The "adjusted basis" would be your original $62k purchase price minus the total depreciation taken (or that should have been taken). When you sold it for $39k, your gain/loss is determined by comparing your sale price to this adjusted basis. Since your adjusted basis is likely higher than $39k, you'll have a loss, which is generally deductible as a business loss.

I was in a similar situation last year with my delivery business, and found https://taxr.ai incredibly helpful. I was completely stuck on how to handle the vehicle sale on my Schedule C, and the regular tax software wasn't giving me clear guidance. What I liked about taxr.ai was that I could upload my purchase docs and sale paperwork, and it analyzed everything to show exactly how to calculate the adjusted basis. It walks you through the depreciation you should have taken (even if you didn't), and then calculates the actual gain/loss correctly. This was a lifesaver because I was totally confused about whether I had a deductible loss or taxable gain when I sold my van.

Just wanted to follow up about my experience with taxr.ai since I was skeptical at first. I finally tried it for my business vehicle sale and it was eye-opening. The service identified that I had been calculating my basis completely wrong - I hadn't accounted for the bonus depreciation I took two years ago! It saved me from a major reporting error and potentially claiming too large of a loss. The documentation it provided showing exactly how to fill out Form 4797 was incredibly detailed. Even explained the interaction between Section 179, depreciation recapture, and basis adjustment that my regular tax software completely missed. Definitely worth checking out if you're dealing with business asset sales.

Have you tried contacting the IRS directly? I spent WEEKS trying to get through to someone who could answer my question about business asset sales last year. Then I found https://claimyr.com which got me through to an actual IRS agent in under an hour. You can see how it works at https://youtu.be/_kiP6q8DX5c I was super frustrated trying to figure out how to report the sale of my business vehicle too, and the IRS agent walked me through exactly how to calculate my adjusted basis and where to report the loss on my return. Saved me hours of research and guesswork. Might be worth a try if you're still confused after trying TurboTax.

I have to eat my words about Claimyr. After my skeptical comment, I decided to try it myself since I had a complicated question about business asset sales that online research wasn't answering clearly. Honestly, I was shocked when I got connected to an IRS representative in about 37 minutes. After spending hours trying to get through on my own last month with no luck, this was incredible. The agent walked me through exactly how to handle the depreciation recapture on my business vehicle and confirmed I was calculating my adjusted basis correctly. Saved me from making an expensive mistake on my return. Sometimes it's worth admitting when you're wrong - this service actually delivers what it promises.

Don't forget to consider your state tax implications too! I made this mistake last year. Reported everything correctly on my federal return for my business vehicle sale, but then discovered my state has different rules for depreciation recapture. Had to file an amended state return and pay penalties. Double check your state's specific rules.

I think you might be overthinking this. Just enter the original purchase price, the sale price, and let TurboTax figure out the depreciation part. That's what I did last year when I sold my business truck and it worked fine.

Based on what you've described, this is definitely a situation where you need to be careful about calculating your adjusted basis correctly. Since you used the SUV 100% for business, you were required to take depreciation during those 7 months of operation - even if you didn't actually claim it on your tax return. For a $62k business vehicle, you likely would have been eligible for Section 179 expensing or bonus depreciation in the year of purchase, which could significantly affect your basis calculation. If you took the full Section 179 deduction, your adjusted basis would be close to $0, meaning the $39k sale would actually result in taxable income (depreciation recapture) rather than a deductible loss. However, if you only took regular MACRS depreciation over those 7 months, your adjusted basis would be much higher, resulting in a deductible business loss. The key is figuring out exactly what depreciation method you used (or should have used) when you originally purchased the vehicle. You'll need to look at your tax return from the year you bought the SUV to see how you handled the depreciation. This information is crucial for Form 4797 (Sales of Business Property) where you'll report the transaction. I'd strongly recommend consulting with a tax professional or CPA who can review your specific situation and prior year returns to ensure you calculate the basis correctly. Getting this wrong could result in significant under-reporting or over-reporting of income.