Discussion:Truck sale after standard mileage
From TaxAlmanac, A Free Online Resource
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.
From TaxAlmanac
Discussion Forum Index --> Basic Tax Questions --> Truck sale after standard mileage
Discussion Forum Index --> Tax Questions --> Truck sale after standard mileage
| 13 June 2008 | |
| Client took standard mileage deduction over five years. He sold the truck. Included in the standard mileage rate is an allowance for depreciation. Is there a table or do I calculate the depreciation amount that was allowed using the straight line method and use that amount to adjust the basis of the truck. | |
Death&Taxes (talk|edits) said: | 13 June 2008 |
| Check Rev. Proc. 2007-70 to compute depreciation element. I do hope this was a pickup, or van or the like and not an 18-wheeler. | |
| 17 June 2008 | |
If the depreciation taken, the depreciation portion of the standard mileage rate, exceeds the basis of the of the truck
What do I do in the following cases if 1. The cost basis was 42000 and the depreciation taken was 53000. The truck was sold for 8000. Do I report only the 8000 as 1245 ordinary income or do I also include the additional 11000 in excess depreciation taken as income. 2. Same situation as in 1 above but the standard mileage was changed to actual cost deduction and the vehicle was not disposed of. Do I just stop depreciation. | |
| 17 June 2008 | |
| 1. 19K gain
2. Stop taking when actual used and fully depreciated. | |
| 17 June 2008 | |
| The above numbers assume 100% business. Don't forget to adjust your calculations if business less than 100%. Example % business miles over the 5 year period was 80% so proceeds from sale adjusted to $6,400 ( $8000 x .80 ) | |
| 17 June 2008 | |
| These are 24 feet mack box truck, similar to the 24 feet U-hall truck. Used only to transport cargo.In prior examinations the IRS allowed the taxpayer to use the standard mileage rate. From my understanding the standard mileage rate is unallowed for such vehicle. Am I correct? And because it was allowed in prior examination should I just continue using the standard mileage rate. | |
| 17 June 2008 | |
| Per Rev Proc 2007-70 "The depreciation described above (standard mileage rate depreciation component) reduces the basis of the automobile (but not below zero) in determining adjusted basis as required by ยง 1016."
Looks like an $8000 gain to me. | |
| 1 July 2008 | |
| "(but not below zero)" is why the gain is 19K. He went 11K below zero. | |
| 1 July 2008 | |
| I disagree Solomon. The basis is not reduced to below zero even if the taxpayer drives a million miles. The taxpayer may take the standard mileage rate on every business mile, no matter how many miles they may drive and no matter what their cost of the vehicle. The depreciation portion of the standard mileage rate may decrease the basis of the vehicle to zero, but not below it. In the above scenario, the gain would be $8,000. | |
To join in on this discussion, you must first
log in.
