Form 4797 calculations

[AZ-Tax]

Client sold partially used for bus vehicle in 2010 that was placed in service 2005. 2009 last yr on 5 yr life. Fully depreciated @ $9389 sold the vehicle for $1776 in 2010. Form 4797 (2010) generated a - $6104 loss. That sound correct?

Adding, seems to me if he completly depreciated the vehicle out over 5 yrs (down to $0) and then received $1776 upon selling it, wouldn't the $1776 be considered recapture thus be ordinary income?

[jimenright]

There is something wrong

with the 4797 data entry - there is a gain, not a loss.

[Lion]

Depreciation

Do you have the depreciation entered?

[AZ-Tax]

I made some edits

The price he paid for this vehicle was $17389 (in 05 same yr placed in service) but due to the % of bus use, his depreication % is $9389 over 5 yrs which ended with 09 tax return. In the vehicle worksheet I changed the Cost or Basis from $17389 to $9389 and now it displays $1776 gain on form 4797 flowed thru to line 14 of form 1040. Thats more like it.

[veritas]

Hers's the problem

The price he paid for this vehicle was $17389 (in 05 same yr placed in service) but due to the % of bus use, his depreication % is $9389 over 5 yrs which ended with 09 tax return. In the vehicle worksheet I changed the Cost or Basis from $17389 to $9389 and now it displays $1776 gain on form 4797 flowed thru to line 14 of form 1040. Thats more like it.

The car was not used 100% for business so you would not allocate 100% of the sales price to the business portion.

[AZ-Tax]

So roughly 50% bus use.

Regardless, if the asset is depreciated out entirely, any residual value has to be a gain so rather then $1776 gain, more like $888.

[David1980]

Well, you could have depreciation limited by the section 280 luxury limitations so that a loss is still there even after 5 years.