Recording a traded in asset for a new asset paying $3,200 difference

[robertlstevens]

on 12/29/19, I traded a commercial mower I purchased for $12,000 in 2018 used in my business for a 2020 commercial mower and I paid $3,200 difference.  The following is how I entered this in turbo tax.  Added an asset, equipment, cost of $3,200.  I then edited my 2018 asset, indicated that I sold the asset for a sales value of $0.  Is this correct (entering a sale of the asset traded in at $0 then adding an asset at the trade in price of $3,200)?

[ColeenD3]

How did you depreciate the original mower? Did you take MACRS over its useful life or take accelerated/bonus depreciation?

[robertlstevens]

I took section 179 deduction for a total of $12,000 in 2018.

[ColeenD3]

Then your basis is zero, but you will have to recapture the Section 179 for the unused amounts. You would normally be entitled to the one year of depreciation so all but that is recaptured.

[robertlstevens]

Can you please walk me through how I would enter this into turbo tax.

[AmyC]

Let me walk you through. 

To input these, return to your business assets.

• Mark your mower as sold, enter the information.
• Enter the new mower and it's information.

The laws changed in 2018. What you have to do now is say that you sold the tractor and purchased a new one.

In your business, go to the asset and mark that you sold it. You will have sold it for $3,200 less than the price of your new mower if I am reading this correctly.

An example:  Let's say the sales price of the new mower is $13,000. You only paid $3,200.

• Which means that you sold your old mower for $13,000-$3,200 = $9,800 for sales price.
• You will have income of $9,800 since your basis in the old mower is zero.
• 2019 Publication 544 - Internal Revenue Service
• Your basis in the new mower, is the amount you have now invested in that property, in your case $3,200
• Topic No. 703 Basis of Assets | Internal Revenue Service