These are generally not taxable transactions if you were not a business, you would not report it on your return, unless, your basis in the car you traded in was more than your trade in amount plus the check you received. Ex. If you paid $10,000 for your car that you traded in and the vehicle you bought sold for $15,000 then you also received an additional $1,500, then you would have sold your car for $16,500 so you would then need to report the $6,500 as income. To do this you will select
- Federal
- Income
- Show More next to Investment Income
- Start next to Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B)
- Select Other
- Continue through and select Other again for the type of investment
- Answer how you obtained the items you sold
- You will need to enter the selling price, dates and the cost basis of the car
If you paid $10,000 for the car and the amount you were given was only $1,500, there would be nothing to report on your return unless this was a vehicle used for business.
If this was a vehicle used for business, then you would need to go through your business return and when you get to the vehicle section, you will say that you sold or disposed of the vehicle in 2023. Continue through and answer the questions regarding when you sold it, how much you sold it for.
Your new vehicle (IF only used for personal reasons) is not included on your return
If you use the new vehicle for business, then you would click start next to vehicle expense and then Add a vehicle if you already had your other vehicle listed. Then walk through the steps to report your vehicle expenses. It will first ask for mileage, then you can select I would like to enter my actual expenses. Here you will be able to see if your vehicle is eligible for full depreciation for 2023.
Business Use of Vehicle
Capital Assets personal use
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