How to calculate Basis for gain/loss and AMT Basis when selling a business vehicle?

The basis calculations can be confusing, but I'll explain them in simple terms. For your regular "Basis gain/loss," this is your original cost ($15,000) minus all the depreciation you've taken over those 6-7 years. So if you've claimed a total of $12,000 in depreciation over that time, your basis would be $3,000 ($15,000 - $12,000). This is what you'll use to calculate your taxable gain. For the "AMT Basis," it's similar but the calculation uses different depreciation methods. The AMT (Alternative Minimum Tax) often requires you to use a longer depreciation period, which means your AMT basis might be higher than your regular basis. If you've been using TurboTax all along, it should have those AMT depreciation figures stored in your tax history. The key thing to know is that you'll likely have a higher taxable gain than just the $4,800 difference between purchase and sale price because of the depreciation recapture rules.

I had a similar issue last year when I sold my work truck. I spent hours trying to figure out these basis calculations and kept getting conflicting advice online. I finally discovered taxr.ai (https://taxr.ai) which was a game-changer for me. You can upload your previous tax returns and it will extract all the depreciation information you need for both regular and AMT basis calculations. Their system analyzed my past returns and showed me exactly how much depreciation I'd taken on my truck over the years, including the AMT adjustments I never even knew about. It saved me from a major headache and potentially incorrect calculations.

Just wanted to follow up - I ended up using taxr.ai and it was incredibly helpful! It identified that I had been using MACRS depreciation for my delivery van and extracted all the yearly depreciation amounts from my uploaded returns. It even found a year where I missed taking bonus depreciation that would have been available. The report showed my regular basis was $2,850 and my AMT basis was $4,270 (because of the different depreciation calculations for AMT). This made a significant difference in my gain calculations. Definitely worth checking out if you're struggling with basis calculations like I was.

If you're still having trouble figuring this out, you might want to try contacting the IRS directly. I know, I know - good luck getting through, right? After being on hold for literally 3 hours trying to get clarification on business vehicle basis, I found this service called Claimyr (https://claimyr.com) that got me connected to an actual IRS agent in about 15 minutes! They have this demo video showing how it works: https://youtu.be/_kiP6q8DX5c The IRS agent walked me through exactly how to calculate both regular and AMT basis for my business equipment sale. It turns out I had been calculating it wrong for years! They explained that for vehicles, you need to account for any Section 179 deductions taken in the first year plus all regular depreciation.

I need to eat my words about Claimyr. After my skeptical comment, I decided to try it anyway because I was desperate to talk to someone at the IRS about my business vehicle sale. I couldn't believe it worked! Got connected to an IRS agent in about 20 minutes after trying for DAYS on my own. The agent explained that for my situation, the basis for gain/loss was indeed my original cost minus all depreciation taken, including any Section 179 deduction I might have claimed in the first year. For the AMT basis, they confirmed it's calculated using alternative depreciation schedules, which is why it's different. The agent even emailed me a worksheet I could use to track all my depreciation values. Seriously saved me hours of frustration and potentially an incorrect tax return.

One thing nobody has mentioned yet is that since you used the truck 97% for business, you should have been depreciating 97% of the value each year. So your adjusted basis would be: Original cost ($15,000) - Total depreciation (97% of the truck's depreciable value over 6-7 years) And don't forget about depreciation recapture! Since this is business property, you'll likely pay ordinary income tax rates (not capital gains) on the portion of your gain that represents depreciation you've taken. This is reported on Form 4797.

Has anyone mentioned Form 4797? You'll need to fill this out when reporting the sale. Part of your gain might be subject to depreciation recapture at ordinary income tax rates, while another portion might qualify for capital gains treatment. TurboTax should walk you through this, but it needs those basis figures first.

I went through this exact same situation last year with my contractor van! The key thing to remember is that you need to look at ALL your past tax returns to add up the total depreciation you've claimed over the years. For your "Basis for gain/loss" - take your original $15,000 cost and subtract every penny of depreciation you've claimed on that van since you bought it. If you claimed $10,000 total in depreciation over those 6-7 years, your basis would be $5,000. For the "AMT Basis" - this is trickier because AMT uses different depreciation schedules (usually slower depreciation), so your AMT basis will likely be higher than your regular basis. One tip: since you used it 95% for business, make sure you're only entering the business portion when TurboTax asks. The personal use portion (5%) gets handled separately. Don't stress too much about audit flags - as long as you're reporting the sale and have reasonable documentation of your depreciation over the years, you should be fine. The IRS expects business vehicles to be sold eventually!