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I'm self-employed. I traded in a car I use partially. first

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I'm self-employed. I traded in...
I'm self-employed. I traded in a car I use partially for business. For the first two years I claimed it for business (2002 and 2003), I used depreciation. Then I switched to the standard mileage deduction, which I now know I shouldn't have done. I read that you only depreciate for five years, which I'm way beyond. Also, the business percentage increased over the years. Can you suggest how to handle the calculations for depreciation and trade-in? Thank you!
Submitted: 1 year ago.Category: Tax
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6/17/2016
Tax Professional: PDtax, Certified Public Accountant (CPA) replied 1 year ago
PDtax
PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 4,712
Experience: 35 years tax experience, including four years at a Big 4 firm.
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Hi from just answer. I'm PDtax. I can assist.

Both issues are surprisingly involved. IRS did put good examples together on the subjects. I'll find those examples and reproduce them here.

I'm working on a phone, so I may need to move to a laptop for this.

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Customer reply replied 1 year ago
That's fine. I have looked at some examples, but since they don't show any of people doing what I did--since you aren't supposed to--they haven't helped.
Customer reply replied 1 year ago
PS I'll be away from my computer for a few hours, so won't be able to respond immediately.
Tax Professional: PDtax, Certified Public Accountant (CPA) replied 1 year ago

Right. You know you aren't supposed to switch to mileage after the first year. The example page I went to has the trade-in math, but not this issue. Depreciation recapture rules cover the topic.

What you did was used an inappropriate method. What you're supposed to do is amend and fix the errors, using 1040x. I suspect the errors do not warrant amendment.

When you do the trade in math, you use both the depreciation claimed and the depreciation piece in the mileage rate.

I'll post an example shortly.

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Tax Professional: PDtax, Certified Public Accountant (CPA) replied 1 year ago

My example assumed you would have claimed more depreciation over time than had you used the correct method throughout. The depreciating recapture rules cover this.

Let's say you claimed $5,000 in depreciation, and an additional 3,000 in depreciation included in the mileage method, but you should have claimed $5,000 plus $5,500 had you not changed methods in error. You are to use 10,500 tho determine depreciation recapture.

1. You need to do the math, and claim the higher of the two depreciation totals for the trade in.

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Tax Professional: PDtax, Certified Public Accountant (CPA) replied 1 year ago

2. I thought i could find the example i know of online, but i can not.

I will need to ask for a price bump for the time to find the example you need.

I'll post an offer to do so. Accept, and I'll dig into our research library.

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Customer reply replied 1 year ago
Thanks for your advice. I will decline your offer of more research and just do my best on this end.
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