Sales Price and Expense of Sale used for Business

[KKC]

I have a vehicle that I used half of the year and then traded it in on a new vehicle. The vehicle was used 50% of the time for business and 50% for personal. When putting in the amount for Sales Price (Business Portion Only) do I put in 50% of the amount they gave me for trade in? Then looking at the Expense of Sale (Business Portion Only) do I put in 50% of the amount financed for the new vehicle?

[ThomasM125]

The sale amount would be 50% of the amount they gave you for the trade-in. You would just report 50% of the sales expenses, but the sales expenses would be any amount that was subtracted from the trade-in amount you negotiated. 

Often, you wouldn't have any sales expenses. The cost of the new vehicle or financed amount would not be sales expenses though.

[KKC]

Would you still put that 50% for the trade in if the trade in was still on a loan? I didn't receive any money for the trade in, it just payed the loan off and then I additionally financed the rest.

[Gottaluvthenips]

Any update to the last question by OP? 

[DianeW777]

Yes.  When the vehicle was purchased you depreciated the vehicle for business, whether in actual depreciation expense or the portion of the standard mileage rate that represents depreciation (if applicable). This means that you began to expense a part of the cost each year when it was placed in service for business, not when it was paid in full but while you were still paying for it.

Likewise, when you trade (sell for tax purposes) a vehicle for another vehicle whatever you receive in trade-in value is considered the business percentage of proceeds from the sale (selling price) regardless of what the funds were used for such as paying off the existing loan on the vehicle.

The IRS doesn't make us wait to expense an asset until it's paid in full, rather when we place the asset in service for business, rental, etc, regardless of the debt. We are required only to be liable for that debt. In other words we are the owner at the time we become liable for the debt that is incurred on any asset for tax purposes.