Can I deduct the money I lost when sell a car at a loss that i used for gig jobs?

Question

Suppose a person has been using his/her car to deliver food to make money. The car was mainly used for business purposes but it was also used for personal use. The person has been doing this for several years. Each year the person has been taking the standard mileage deduction, roughly 50 cents per mile. That is, they have not been depreciating the car. In 2021 they sell the car and buy a new one. It is my belief that they do not have to report the sale of the car on their 2021 income tax return. When they use TurboTax to do their tax return, it generates form 4797. This form is used to report the sale of business property. In their case, it shows no gain or loss. Is this right? Should it be generating this form? I believe it should not because no depreciation was taken.

If the car was sold for less then it was paid can you take a deduction for the loss. I believe not because the person took the deduction for the mileage.

This person is in the United States.

Answer 1

This form is used to report the sale of business property. In their case, it shows no gain or loss. Is this right?

Yes, you're selling an asset that is your personal property, and was only used for business activity (i.e.: not owned by the business, just used by it). It is likely sold at a loss that is not recognizable.

Should it be generating this form? I believe it should not because no depreciation was taken.

Yes, you're selling a depreciable asset used in a business. The fact that no depreciation was, or should have been, taken will be reflected on the form.

If the car was sold for less then it was paid can you take a deduction for the loss. I believe not because the person took the deduction for the mileage.

Not because of the deduction for mileage, but because it's a personal property and not a capital asset of a business.