DianeW777
Expert Alumni

Deductions & credits

The sales price will be the trade-in value/amount allowed towards the purchase of your new vehicle. The expense of sale could be zero since those expenses would likely be part of the expense to purchase of the new vehicle.  They would be added to the cost basis of the new vehicle; such as sales tax, title fees, etc.

 

The IRS law under the Tax Cuts and Jobs Act (TCJA) no longer allow a 'trade-in' to offset the cost of the new vehicle. It requires a sale of the old vehicle and then a new vehicle listed as a new asset for the total cost of the new vehicle.  Since the trade-in value is a taxable sale price, it also becomes part of the cost of the new vehicle.

 

Your tax basis (cost), for the vehicle you gave up, is the vehicle’s original cost, plus improvements, minus all your annual depreciation deductions. TurboTax will automatically calculate this if it has been an asset listed in your return.  You will indicate it was sold, then TurboTax will ask the necessary questions about the sale.

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