Open TurboTax

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
Announcements
Your taxes, your way. Get expert help or do it yourself. >> Get started
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

cancel
Showing results for 
Search instead for 
Did you mean: 
carson2246
Level 1

vehicle trade in for real estate

OK no Like Kind for business vehicles.  Trade in was $12000 on $40,000 SUV less the 6,000 pounds.  Vehicle in service April 2014.  Have all of the business mileages for previous years.  Basis for the car as calculated in 2014 is $13,500 with purchase price of $30,500.   Assuming approximately 60% usage the business sale portion is $7,200.  Turbo Tax says I have a $7,200 gain.   The basis and depreciation portion of standard deduction seem to have no effect or relation to the $7,200 calculated gain.   I understand the gain for the sale of a rental property which has been depreciated:   The gain on a rental property would be the market value when rented, say $100,000, depreciation of $20,000 and sale of $120,000 would be $40,000.  Been doing this for 15 years

3 Replies
ThomasM125
Employee Tax Expert

vehicle trade in for real estate

If the purchase price was $30,500 and the auto is used 60% for business, the initial basis would be $18,300. From that, you need to subtract the depreciation for four and a half months to get the adjusted basis at time of sale.

 

If you didn't take any special allowances for the depreciation, the accumulated depreciation for the period of time you used it in the business should be about $10,000, so it looks like you should have a loss on the sale.

 

Since the gain is being reported as the sale amount, there must be something wrong with the cost of the vehicle in TurboTax or the accumulated depreciation. Both of those amount are asked for in the program when you enter the sale of the vehicle. I suggest you go back through the sale entry and make sure the cost and prior year depreciation amounts are entered correctly.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
carson2246
Level 1

vehicle trade in for real estate

The answer doesn't track with the Turbo Tax screens, so still confused as to the gain of $7,200

1. Trade in value of the Honda CRV was $12000.  Use 60% business usage and entered $7,200.

2. Honda CRV cost.  No "depreciation" for the vehicle only standard mileage deduction. New cost of CRV was $30,500. Traded in older CRV for $17,000.  Computed CRV basis as $13,500.  Do I enter $30,500 or $13,500? The next screens suggest the $30,500.  I've done this with $30,500 and $13,500 and the gain is $7,200 for both.

3 Lets get info on your gain or loss basis screen.  As above older CRV basis was $13,500

4. Calculated depreciation equivalent.  Obtained business mileage for CRV from 2014-2019 and used depreciation factors ($.22 to $.26) as $9,072.

 

There is no accumulated depreciation in any of the Turbo Tax prior years only the standard mileage deduction which as you know includes a depreciation factor.  Entering the business mileage does not post a depreciation in Turbo Tax.

5. Result is a gain of $7,200 in Turbo Tax

6. What is the basis for the new Acura?  Obviously this will be a future issue.   Purchase price was $40,000 with $12,000 trade in. 

ThomasM125
Employee Tax Expert

vehicle trade in for real estate

I'm a little confused as to what amounts belong to which vehicle. 

 

The basis of the new vehicle purchased in 2019 would be the purchase price less the trade-in value you got from the vehicle you gave up.

 

The sale price of the vehicle traded in 2019 for the new vehicle would be the trade-in value. The cost basis of that vehicle would be the original basis of that vehicle, less the depreciation equivalent of $9,072.  

 

 

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

About Community

Learn about taxes, budgeting, saving, borrowing, reducing debt, investing, and planning for retirement.

3.48m
Members

2.6m
Discussions

Manage cookies
v