SALE OF ASSET

First you must take be sure you have recorded the sale of the vehicle that was sold in 2023. The following should allow you to arrive at the correct information.

The way to report the sale (trade is not really recognized by the IRS any longer for equipment or vehicles) is as follows. You have all the records so it should provide you the detail to move forward.

1. All business miles for all years and then total miles for all years - divide business miles by total miles to arrive at your overall business use percentage for the life of the vehicle. You will use this percentage times the selling price (trade-in value) to arrive at the business selling price. Use the same percentage to arrive at your business portion of the cost before depreciation. 
2. If you used actual expenses and depreciation, be sure you have the total depreciation used as a business expense for the life of the vehicle.
3. If you used the standard mileage rate for all years it was used for business you must calculate the depreciation portion of the mileage rate (see the chart attached below for that portion for each year).
4. When you go through the vehicle information in your self employment section be sure to select 'Sold, disposed of, etc....' then do not indicate it was sold.  You must say 'Yes' it was converted to personal use.  This will eliminate any sales information in the vehicle section it self.
5. Once you have completed the information in that section and gathered the information above, you will follow the steps below to enter your business portion of the sale:
   1. Go to Less Common Business Situations
   2. Scroll to Sale of  Business Property
   3. On the next screen select Any Other Property Sale
   4. Use the information from step one and the depreciation from step 2 to complete your sale
6. If the personal portion of your vehicle is a loss there is nothing to report for that portion of the sale/trade.

Second you will enter the vehicle you began using after the sale of the old vehicle. If I understand, the vehicle being used now is using actual expenses.  The cost basis for this vehicle must be the lesser of the actual cost (unlikely) or the fair market value (FMV) on the date it is placed in service for business.

1. Be sure to enter the correct cost basis (you could use kbb.com to find the FMV
2. Enter the date you first placed it in service for business use 
3. Continue to enter the vehicle information
4. Decide if you would prefer standard mileage rate or actual expenses.

• The Actual Expense Method requires the mileage log plus details of all expenses.  This includes fuel, repairs, oil changes, tires, etc.You can choose between two methods of accounting for the business mileage deduction amount: 
• The standard mileage deduction 
  • For 2023 is 65.5 cents per mile for business
  • IRS Mileage rates
  • If using standard mileage, it must be chosen in the first year the vehicle is in service