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Bwheeler353
February 3, 2026
Question

Depreciating new vehicle and sale of old vehicle

  • February 3, 2026
  • 1 reply
  • 3 views

I operate a small electrical contracting service as a side job.  This year I sold the truck that I had been using and purchased a new one.  The truck that I had been using was originally a personal vehicle and then was shared for personal and business use for the last 5 years.  It was paid off prior to being used for any business activity.  

I sold the truck for $16K and then took 4K from the business to put 20K down on the new truck.  

I want to depreciate the new truck over 5 years.  I use Quickbooks self employed and I'm not sure that I am capturing the entries correctly.  

Also, while doing my taxes, it seems that TurboTax is trying to recapture the depreciation that was taken with the standard deduction method for those 5 years now that it sold.  

Should the 16K be shown as income for the business if the vehicle was not owned or paid for by the business.

How would I account for the transactions in Quickbooks?

 

I appreciate any help.

1 reply

K
Kurt_MQuickBooks Team
QuickBooks Team
February 3, 2026

I appreciate you reaching out, @Bwheeler353. Dealing with vehicle transitions can be tricky. Getting your depreciation and sale records correct is essential for a smooth tax season, so I will help ensure your entries are accurate.


The main cause for confusion in TurboTax is that even with the Standard Mileage Rate, the IRS considers a portion of that rate to be depreciation taken. When you sell the vehicle, you must account for this to determine your taxable gain or loss.

 

To handle this situation in QuickBooks Self-Employed, you'll need to categorize the $16,000 sale deposit as Personal. Since the truck was shared, only the business-use percentage of the sale is reported on your taxes. For the $4,000 down payment, categorize the transaction from your business account as Business under the Car and Truck category.

 

Since the program doesn't calculate depreciation like other QuickBooks products, you'll want to enter the truck's total cost and your five-year preference directly into TurboTax under the vehicle expense section. To protect your records, ensure you keep a log of business vs. personal miles for the old truck's final year to justify the sale price split.

 

Moving forward, if you choose the Actual Expenses method for the new truck's first year, know that you cannot switch back to the Standard Mileage Rate for that specific vehicle in future years.

 

Please don't hesitate to click the Reply button if you have other questions about QuickBooks. 

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