Depreciation is listed yearly on Form 4562 "Depreciation and Amortization".
When you put a vehicle in service as a business asset, depreciation is taken based on the expected useful life of the asset.
Cars are usually five years.
Your original basis would be the purchase price. If the price was 35,000 that was the value to you, so that would be your basis.
Whether you paid 35,000 cash, took a loan, or traded in something of value (your old vehicle) or any combination still results in the car being worth 35,000 to you. That would be your basis.
Depreciation would be based on that value/basis.
Depreciation can be computed several ways, such as "straight-line" which is equal amounts each year.
There is also "Bonus Depreciation" allowing a larger amount to be taken the first year, and Section 179 which is a deduction which allows you to basically "Expense" part of the value.
If you owned the car as a business asset for 10 years, reason says you used all the available depreciation. The car would have no value left.
Whatever the Dealer gave you as a Trade-in value is what you sold the vehicle for.
There was a time when business vehicles could be treated as Like-Kind exchanges, but that is only available for Real Estate now.
So, whatever you paid less depreciation is subtracted from the sale price (in your case, the trade-in value)
If you paid 35,000 and depreciated fully 35,000 that leaves zero. If the Trade-in was 2,000, you have a 2,000 gain.
Remember that this trade-in value is added to the value of the new vehicle.
If you paid 48,000 cash plus traded in the old car for 2,000, your basis in the new vehicle is 50,000.
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