Disposition of Vehicle -Used Standard Mileage

[equinecpa]

I am a little confused.

Scenario: Client has truck used approximately 15% for business, 85% personal use.
Sells truck. Say originally purchased for $20,000, sold for $10,000
The truck was used only about 10000 miles, 1500 business in all.

I am getting a schedule 4797 loss on this truck, is this correct? Something tells me that with this much personal use on this vehicle I shouldn't have any business losses.

This is how the numbers work for me:

ACB of vehicle for business .15 x 20000 = $3000

Depreciation (using mileage rates for each year) $250

Undepreciated balance $2750

Proceeds 1500

Loss 2250. Can this be right?

Thanks all

Carolyn

[OldJack]

You have not said who owned the vehicle?

[equinecpa]

This is a schedule C filer - the individual owned the vehicle.

[OldJack]

Suggest you study the auto sale example in 2006 pub 463, Travel, Entertainment, Gift, and Car Expense", page 25, subject "Disposition of a Car". htt://www.irs.gov/pub/irs-pdf/p463.pdf

[Kram BergGold]

Loss 1250

$3,000- $250 = $2750 - $1500 = $1250.

[equinecpa]

Sorry my math whilst typing sucks, $1250 is the loss I calculated. Deductible or no?

I read the 463 before posting - it doesn't contemplate the personal use side of this. I revisited it again, and to me it looks like a deductible loss, but I can't help thinking there is an overiding clause somewhere I'm missing....

Carolyn

[veritas]

Cpas for horses?

I thought I saw it all with Horse Chiropractors.

You knowI haven't had a good rant about horses (or horse ppl) for sometime now.

The loss is deductible.

[RLymanC]

Loss

It just boggles the mind that the IRS will allow a loss. :>)

[equinecpa]

That's why I'm posting....it doesn't quite seem right to me either. Does business use less than 50% come into play here? There must be some part of the code that deems this a personal asset and therefore disallows the loss....

Veritas - I use equine Chiropractors!

Carolyn

[veritas]

Do they do

adjustments?

The loss on the business protion of the vehicle is a 4797 loss.

[Brad Imsdahl]

The loss on the business portion is deductible.

That's why I'm posting....it doesn't quite seem right to me either. Does business use less than 50% come into play here? There must be some part of the code that deems this a personal asset and therefore disallows the loss....

The 50% rule is the limitation on accelerated depreciation. There is no similar limit on deducting losses.

If it makes you feel any better, being able to deduct 15% of your loss also means that 85% of the loss is non-deductible.