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posted Apr 23, 2023 11:19:47 PM

Vehicle addition, disposition, CCA

I am self-employed, used Lexus vehicle for work whole year 2021 until the end of December 2021, the vehicle had lots of wear & tear due to long business drives and needed lots of high-cost repairs so I bought another vehicle (more economical Honda) on 30 November 2021 but started driving it only from 1st January 2022 for work. I never sold Lexus, I gave it to my spouse for free to drive short distances. Lexus had UCC 2,000 at the end of 2021 year. I did not drive Lexus in 2022 however I did not do any disposition of it in 2021 either. My questions:

1. Do I have to do a disposition of Lexus on 2022 taxes (I didn't drive it in 2022 for work and the UCC at the end of 2021 was 2,000)? If I need to record Lexus Disposition in 2022, what amount should I put for disposition considering I did not sell it (gave it to spouse) because the repairs would be probably as high as sale price so my spouse just drives it for short distances. Basically, I "killed" my Lexus car driving long distances for business and I couldn't drive it any more for work as felt unsafe to drive long distances on highway due to required high-cost repairs.

2. For Honda, that I bought on 30th December 2021 but started to drive for business only 1st December 2022: do I have to record it as an addition in 2022 (though I bought it on 30/11/2021) or should I put it right away under UCC at the start of the year at the purchase price from 30th Nov 2021 at $26,400 (just 1 month difference between purchase date and business use)? I understand it's addition for my business in 2022; I started to use it for business from 1st January 2022 but it was bought 30th Nov 2021 (I couldn't drive it in December 2021 because I needed to get winter tires and do couple of small repairs before I can start driving for work in January 2022; the Honda is second-hand/used car)

3. If I need to do a disposition of 1st car (Lexus) at Far Market Value (hopefully minus necessary repairs, please advise on this), and if the Fair Market Value is a bit higher than UCC at the start of the year, will Turbo Tax do an automatic recapture and record a recapture as additional income on line 8230? I tried to put $5,000 for Lexus disposition but my income numbers/tax owed do not change. Do I have to enter recapture amount somewhere manually? As a note, Lexus was bought in 2012 as a used car at $22,000.

Thank you!

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