Question

Divorce and Section 179 recapture/gain/loss

Forum|Forum|2 years ago
February 12, 2024
1 reply
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I took the section 179 in 2018 for my business truck. Used more than 50% from 2018-2020. In 2021, I was legally separated from my ex, and in the last quarter of the year, he took this truck for himself. I bought myself another vehicle to replace it in the same year.

He traded that truck in in 2022.

In 2023, the divorce was finally final.

In 2024, I realized that I never filed my 2021 taxes and started them. How do I report this 'loss'. If I put I stopped using the truck in 2021, it prompts me to enter the sales price or trade in price. In a literal sense, that is $0. I gained nothing from the truck at it's disposal. Can someone guide me to ensure I did this correctly? It created a $10k loss for my business when I did this. Someone told me I had to use FMV as the sales basis and frankly that doesn't seem right or fair. I didn't get FMV for it.

A

AmeliesUncle

Unfortunately, TurboTax does not walk you through this.

I don't have TurboTax right now (I'm a tax professional, not a TurboTax user) so I could be completely wrong, but if I remember correctly:

In the vehicle section, go through it an say "yes" to "Special Handling". Or say it was converted to personal use. Don't enter a sales price (or leave the sales price BLANK).
Report things in the Sale of Business Property Section. I don't specifically recall which sub-section to check - but look for if there is anything that says a vehicle that dropped to 50% or less business use.
MANUALLY calculate the "recapture" amount.
MANUALLY enter the "recapture" amount as income for your business

Maybe somebody can give better details than that, but that may get you in the right direction.