How to claim capital losses on an ice vending machine I sold at a major loss?

Thanks for the quick response! I owned the machine for about 3 years before selling it, so it sounds like it would be a long-term capital loss. Do I have any limits on how much of the loss I can claim in a single tax year? The machine originally cost me around $28,000 and I ended up selling it for only $8,500.

Yes, there are some limitations. For individual taxpayers, capital losses can offset capital gains plus up to $3,000 of ordinary income per year. If your net capital loss exceeds that $3,000 limit, you can carry forward the unused portion to future tax years. With your numbers, you have a $19,500 loss. If you don't have any capital gains to offset, you could deduct $3,000 against your ordinary income this year, and then carry forward the remaining $16,500 to use in future tax years (again, up to $3,000 per year against ordinary income if you don't have capital gains).

How does it actually work with something like a vending machine sale? Does it just tell you which forms to use or does it help you fill them out too? I've got some old business equipment I need to sell and I'm worried about messing up the tax part.

I'm curious if it handles other types of capital assets too? I sold some crypto last year at a loss and my regular tax software made it so complicated I'm not sure if I did it right.

For equipment sales like vending machines, it analyzes the asset type, purchase documentation, and sale information to determine exactly which parts of Form 8949 and Schedule D need to be completed. It actually walks you through the specific fields and explains what goes where - not just general advice. Absolutely! It handles all types of capital assets - real estate, cryptocurrency, equipment, collectibles, etc. I've heard from friends who used it for crypto losses that it was particularly helpful because it correctly categorized different types of transactions which many tax programs mess up.

Wait, how does this actually work? Do they just call the IRS for you? I'm confused why you couldn't just call yourself.

Sounds like a scam to me. What's stopping the "service" from just collecting your personal info and doing nothing? I've heard the IRS wait times can be 2+ hours these days.

They don't call for you - they call the IRS, navigate through all the automated menus, wait on hold (which can take forever), and then when an actual human IRS agent comes on the line, they call your phone and connect you directly to that agent. So you skip the hold time completely. I was skeptical too at first! But they don't actually collect any tax info from you - they just need your phone number to call you when they reach an agent. You speak directly with the IRS yourself. And yeah, when I tried calling myself, I was on hold for over 90 minutes before getting disconnected. With them I was talking to an actual IRS agent in about 40 minutes without having to sit by my phone the whole time.

I'm not familiar with Section 1245 property - is that different from regular capital assets? Does it change how I would report the loss?

Section 1245 property generally refers to depreciable personal property used in a business. If you were using this vending machine as a business and taking depreciation deductions on it, then it would be Section 1245 property. The main difference is that losses on Section 1245 property are generally treated as ordinary losses rather than capital losses, which is actually better for you since ordinary losses don't have the $3,000 annual limitation that capital losses do. You'd report this on Form 4797 instead of 8949/Schedule D.

This is really important! If OP was claiming business expenses and depreciation on the machine, this isn't a capital asset but business equipment and would be filed completely differently.

@862c57aae96a This is a crucial question that Sofia raised. If you were operating the vending machine as a business - even informally - and claimed any business expenses like electricity, maintenance, restocking costs, or depreciation on your tax returns, then this isn't a capital asset at all. It would be business property and the loss would be treated as an ordinary business loss on Form 4797, which is actually much better for you since there's no $3,000 annual limit like with capital losses. You'd need to look back at your previous tax returns to see if you reported any income or expenses related to the vending machine operation.