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Posted by taxxcpa on February 6, 2007, 10:36 pm
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Justin wrote:
> I'm deducting mileage on form 2106. I'm a traveling music
> teacher, I commute to an office and from there am sent to
> various places to teach.
>
> It is my understanding that my mileage accrued during the
> work day (after arriving at the office) is deductible. I
> travel 30,000 miles a year during the workday outside of my
> commute to the office. This adds up to a very sizeable
> deduction. I am no reimbursed for any travel expenses except
> tolls.
>
> The car I use is for both business and personal, with only
> about 10,000 miles a year being for personal. I sold the car
> this year and bought another car. Turbotax is taking the
> $4000 I sold the car for and counting as income, which is
> reducing my refund by over $600. I owed $4500 on the car
> when I sold it for $4000. It is not like this money was
> "profit" or "free and clear".
>
> Form 2106 is clear cut and says "Date Vehicle Sold" and
> "Sale Price". After entering these fields, Turbotax reduces
> over $600 in my rebate. It never asks wether there was a car
> loan?
>
> If it matters, I do not depreciate the car as an asset. I
> just take the mileage deduction each year.
If you sold it; i.e. did not trade it in on the new car then
your gain would be the sales price minus your 'adjusted
basis.' Your basis would be the original total
cost(including the loan) minus depreciation allowable. If
you paid $ 20,000 for the old car and sold it for $ 10,000
and had allowable depreciation of $ 5000, your adjusted
basis would be $15,000 and you would have a $5000 loss--but
only the business percent of the loss would be deductable.
If you had a gain, the gain up to the amount of depreciation
would be ordinary income and any additional gain would be a
capital gain.
If the sale and purchase were considered as a trade-in, the
gain or loss would not be reported, but would be an
adjustment to the basis of the new car.
You may need to consult a CPA in order to get this all
clarified and correctly reported. Turbo tax cannot do your
taxes correcgtly unless you know how to input the figures.
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