Trade a tractor on a new one

[nova16]

On my farm I traded my old tractor in a new tractor, I am still depreciating the old tractor and no cash was used on the trade, used the value in the old tractor as trade in allowance. What are the procedures to report this trade? thanks

[Anonymous_ · Accepted solution]

You have to report the trade-in of your old tractor as a sale because after the TCJA (tax reform) Section 1031 now applies only to exchanges of real property and not to exchanges of personal or intangible property.

See https://www.irs.gov/businesses/small-businesses-self-employed/like-kind-exchanges-real-estate-tax-ti...

Your new tractor would then be added as a new asset subject to depreciation with the basis for depreciation being whatever you received for the old tractor (which sounds like an even trade).

[nova16]

thank you perfect

[nova16]

Can I delete items from my Farm Asset Summary when there is no more depreciation and how does it affect anything? thanks

[JohnB5677 · Accepted solution]

Assets that still exist in your business should be maintained until they are disposed of regardless if they are fully depreciated.  Once the item is disposed of it should be cleared to be removed with a disposition, and not deleted.  Items that are fully depreciated may still have value and could be sold.