Question

CAR returned to dealer

Forum|Forum|4 years ago
March 7, 2022
1 reply
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Returned a car I was using for business, as well as personal use to the Car dealer, as the amount I owed was more than what the car was worth. The car had high milage and wear. How to I fill out the portion on Car expenses. The car was repossessed by the dealer and sold; however, I did not receive any monetary gain from the sale. Do I need to put down a depreciation value? * I am asking this question for a friend who is using Turbo Tax to do his taxes.

TurboTax Deluxe Online

KrisD15

Report the sales amount as the amount left on the loan.

Enter that amount into the TurboTax program.

Depending on the depreciation taken, you may need to recapture some and pay tax on that amount.

For example, if the car was 100% depreciated, and the amount on the loan was 3,500, the sale price would be 3,500 and that would be the depreciation recapture amount as well since the Cost basis would have been "zero'ed" out by the 100% depreciation.

@JEChicago

If the Taxpayer received a 1099-C for the canceled loan on the vehicle, use that amount as the selling price and file that 1099-C under the business. Remember to not claim the amount twice. If you claim it as the price you got for the car, AND you ALSO enter the 1099-C (the IRS will look for the 1099-C) thus entering the income twice, be sure to expense the amount as well.

So, if entered as received for the car and also entered as received on 1099-C, (for example 3,000 for the car and 3,000 for 1099-C = 6,000) enter a Miscellaneous expenses and describe it as "Adjustment for 1099-C also reporting car proceeds".

(3,000 for selling the car + 3,000 for the 1099-C - 3,000 Miscellaneous expense = 3,000 final income)

[Edited 03/07/22 I 6:10pm PST]

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