Someone rear-ended my car on my way to a business meeting. Can I deduct the loss as an expense on my income tax?

I was rear-ended by another car; the driver admitted she hit the accelerator instead of the brakes, so it was totally her fault. I was paid $4,200 as fair value for my (15-year-old) car by her insurance company. I had to buy another car, which I did for about $7,000. Can I deduct the difference, i.e., $2,800 as a

I was rear-ended by another car; the driver admitted she hit the accelerator instead of the brakes, so it was totally her fault. I was paid $4,200 as fair value for my (15-year-old) car by her insurance company. I had to buy another car, which I did for about $7,000. Can I deduct the difference, i.e., $2,800 as a business expense? I need a car to run my business.

Best Answer:

holacarinados: no – that has nothing to do with business and most of your driving is probably commuting (non-business) or personal miles and those – I'm surprised you get anything for a 15 yr old car – if you just decided to sell the car, you wouldn't have gotten any more than $4200 so the fact you bought a $7000 car means nothing – it's not a loss

Other answer:

holacarinados:
Just like any vehicle used for business, you can either deduct a pro-rated portion of actual business expenses (cost of car, insurance, repairs, fuel), etc. or you can deduct business mileage. You cannot deduct both.

If you choose to deduct actual costs instead of mileage, the cost of the car itself would have to be depreciated – you cannot deduct it all in one tax year and you cannot deduct the whole $2800…you can only deduct the pro-rated portion that is for business.

Either way you need to keep a detailed mileage log so you know how much is used for business and how much is used for personal.

oklatom:
No, you had no loss. You had a vehicle worth $4.200 and were paid that for the loss. You upgraded, which can perhaps be taken over a few years as depreciation on a new investment, but it isn't a loss.
beSee-n-u:
Your story doesn't mention any loss, since you were paid the fair value of your car, meaning you didn't have any gain or loss.
Bob:
Nope
Judy:
no
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