Business Vehicle Trade In

[aprilwineskis]

I have called Turbo tax a few times and haven't really received a straight answer but I want to make sure the trade in of our 100% business truck in 2021 is reported correctly. Under old vehicle we stated we traded in and removed from service. I entered $22000 as that is what we received for trade in towards new truck, all other expenses recorded including depreciation as Turbo Tax tracked it through the years. On the new Truck I entered all expenses and cash of $26000 for cost and entered Full Market Value of those combined $48,000. So the system allowed for special depreciation of new truck at $48000 and placed a $22000 gain on old truck. I have read on previous threads you can do it this way or report 0 gain on old truck and reduce your value of the new truck to reflect. The numbers are close but slightly different in refund amounts so I would like to know the correct way to report.

[ColeenD3]

No, that is not correct for 2021. A trade-in is now considered a sale as of 2018. Prior to that, you could treat it as a like-kind exchange but that law was repealed with TCJA.

[aprilwineskis]

Thank you, I have it correct then, as it is in as a sale and reported gain.

[Nealem]

Hi there, I traded in a truck and replaced with a new one, Turbo Tax Home and Business wants to put the new truck on the same line as the older truck that is being removed. Both are class 10.1 and revenue Canada is specific with needing to keep the vehicles on separate lines. This leaves me with a $0 CCA balance at the end of the year as it looks like Turbo Tax thinks I have bought and sold the same truck.

I have tried assigning a new row number to the new truck but Turbo Tax continues put put it on the same line as my original truck. I have called several times but no-one has been able to help.

Thank you for any help you may have for me.

[TurboTaxBrenda1]

I just verified on Home & Business and entered 1 vehicle sold and 1 purchased. It seems that they go on the same line but they actually are there separately. 

Are you using Forms mode or Easy Steps?  So that we can assist you further with screenshots.

[Nealem]

I have tried both, originally using easy step and it put both the trade and purchase on the same line so I went to forms and assigned a new "row" for the 2021 truck. However this made no difference to the additions and dispositions line, they were on the same line. Revenue Canada is clear, they need to be recorded separately. I have had four phone calls into the help line.

Opening cca for 10.1 was $14119.35. The purchase allowable on new truck is $33900. Trade in value was $26000 however, according to revenue canada the amount to claim in dispositions in class 10.1 is " record the lesser of: the proceeds of disposition of property minus the related outlays and expenses and the capital cost of the vehicle" Since the only vehicle in class 10.1 is the trade in vehicle the amount would be $14119.35.

I feel like this is a glitch in this class for cca. 

Thanks for any help.

[TurboTaxBrenda1]

I am sorry, I am not understanding when you say they are on the same line? Here are some screenshots on how it would look like,  

Both are on separate lines- If you traded in the property to buy a new one, the proceeds of disposition is the amount you received for the trade-in. For example, if you trade in your old car and receive a $4,000 credit toward the new one, the proceeds of disposition is $4,000.

[Nealem]

Revenue Canada requires each vehicle in category 10.1 to recorded individually. The disposal of the trade in vehicle should come off of the opening balance of the undepreciated value and allow for 50% depreciation with an ending balance of $0

The new purchase should start as a purchase or addition but on a new line with the allowable $33,900 and also eligible for the 50% rule.  

In your example the new vehicle has a $0 balance a the end of the calculations and no depreciation.  Should there not be undepreciated balance at the end of the calculations? 

[TurboTaxBrenda1]

Not if it is a new vehicle. Next year you will have a depreciation.