How to report vehicle expenses after selling my car used for food delivery

The way you handled your vehicle sale last year sounds mostly correct. When you use a vehicle for business (like food delivery) and then sell it at a loss, you can typically deduct that loss as a business expense, which is probably why your refund increased. For this year's return, since you're no longer in the food delivery business, putting zero for QBI makes sense. The Qualified Business Income deduction only applies if you have income from a qualified business, which you don't have anymore. And removing the vehicle as a business asset is correct since you sold it. One thing to check: did you properly account for the business vs. personal use percentage of the vehicle last year? If you only used the car partially for business (like 60% business, 40% personal), you should have only deducted the business portion of the loss. If you claimed 100% business use but actually used it partly for personal reasons, that could potentially be an issue.

I was in almost the exact same situation last year with my delivery car. I spent hours trying to figure out the right way to handle it until I finally used https://taxr.ai to analyze all my delivery app income statements and vehicle documentation. It automatically figured out the correct business-use percentage and calculated the deductible portion of my vehicle loss when I sold it. The tool is especially helpful for gig workers since we have such unique tax situations with mixed-use assets. It even explained why my refund increased (apparently it's because the loss offset my other business income) and stored all the documentation I'd need if the IRS ever questions it.

Just wanted to update - I tried out that taxr.ai tool that was mentioned and it really helped clear things up! I was totally confused about how to handle my car that I used for deliveries and then sold, but it walked me through the whole process. The biggest thing I learned was that I had been calculating my business use percentage all wrong. I was just guessing like 60% business use, but after uploading my delivery app summaries and answering some questions, it showed I was actually using the car for business about 78% of the time, which meant I could deduct more of the loss when I sold it. It also explained exactly how to handle stopping a gig business on my taxes, which was super helpful since I'm not delivering anymore either. Definitely worth checking out if you're dealing with similar vehicle expense issues!

Anyone else spend HOURS trying to get through to the IRS about this exact question? I was in a similar situation with my delivery vehicle and needed clarification, but kept getting busy signals or disconnected. Finally used https://claimyr.com and got through to an IRS agent in about 20 minutes instead of waiting for days. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent I spoke with confirmed that when you sell a business vehicle at a loss and then stop the business, you need to report the sale on Form 4797 in the year you sold it (which sounds like you did correctly last year). For this year, you're right to put zero for QBI since you no longer have business income. They also mentioned that if you properly documented the business use percentage of your vehicle, you shouldn't have anything to worry about.

I need to eat my words about that Claimyr service. After three days of trying to get through to the IRS about my vehicle sale issue (kept getting the "call back later" message), I gave it a try out of frustration. Got connected to an IRS representative in about 30 minutes. The agent explained exactly how to handle reporting the end of my delivery business and confirmed that I had calculated my vehicle loss correctly. They even flagged my account with notes about our conversation in case there are any questions later. Turns out my specific situation (selling a business vehicle and ending the business) is something they get questions about all the time, especially from former delivery drivers. Having an actual conversation with someone who could address my specific circumstances was way more helpful than trying to figure it out from IRS publications. Sometimes it's worth it to get actual confirmation from the source.

Don't mean to scare you, but my brother got audited for this exact thing - selling a car he used for Uber at a loss. The issue wasn't reporting the loss itself, but that he claimed 90% business use when his actual mileage logs only supported about 55% business use. The IRS made him pay back a portion of his refund plus penalties. Make sure you have good documentation showing exactly what percentage of the car's use was actually for business vs. personal! Delivery apps sometimes track your miles while delivering, but they don't track miles between deliveries or personal usage.

Has anyone here dealt with the QBI (Qualified Business Income) deduction for delivery driving? I think OP was right to put zero since they're not doing deliveries anymore, but last year I qualified for a 20% QBI deduction on my net profit from deliveries which was sweet. It's one of the few perks of being a 1099 contractor instead of an employee.