Sold car and purchased a new one?

[southwestform]

In December 2010 I sold a car that I was using to deduct gas mileage from over the past few years and I purchased a new car that I started deducting mileage on over the month of December. I only drive a few thousand miles per year for my business. The car is also used for personal use.

1. How do I show that I no longer own the old vehicle and purchased a new one?

2. Since I just purchased the new car, how should I decide if I should deduct mileage or depreciate the car?

Thanks.

[mwcpa]

1. How do I show that I no longer own the old vehicle and purchased a new one?

From RIA
"The sale of a vehicle used for business and personal purposes is reported as though two assets were sold—a business vehicle and a personal vehicle (Sharp, Jr.). In computing gain or loss on sale, the original cost and sales proceeds are allocated to the personal and business assets based on their relative cumulative miles divided by total cumulative miles. Allowed depreciation is allocated 100% to the business asset. If a gain is realized, it is fully taxable. If a loss is incurred on the business auto, it is deductible as a Section 1231 loss. A loss on the personal auto is not deductible [Reg. 1.165-1(e)]."

2. Since I just purchased the new car, how should I decide if I should deduct mileage or depreciate the car?

You need to run the numbers to see what is best...

[southwestform]

Thanks for the response.

I will run the numbers to see which is best, though, generally, are there other advantages/disadvantages over the long term to deducting mileage vs. depreciated the car? In particular, with someone like me who will likely not drive more than 5,000 miles per year for business. From what I understand, once you decide to deduct mileage or to depreciate the car you can not change to the other method in future years.

Thanks.