Yes. First you will sell the old tractor, a trade-in is no longer allowed for personal property, only real property.
- Real Property - Land, buildings and their structural components
- Personal Property - Everything else (both tangible and intangible) -- the tractor
You need to dispose of the property by telling TurboTax how and when it was disposed of. Follow the instructions below.
- Go Income > Scroll down to Rent, Royalties and Farm
- Click Start next to Farm Income and Farm Rental > Proceed through the interview to enter your farm income and expenses
- Click Update to the right of Assets/Depreciation.
- Click Edit to the right of the tractor you disposed of
- Go through screens until you get to Tell Us More About This Farm Asset
- Click on This item was sold……. And continue to answer the questions
- Be prepared with the selling price (trade-in amount) and any selling expenses, date of sale
- TurboTax will determine gain or loss and carry it appropriately to your tax return.
Next add a new asset for the new tractor using the actual cost ($40,000) including purchase expenses (sales tax, etc). Continue to answer the questions about the new tractor. TurboTax will handle the new tractor and the sale of the old one.
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