i traded in my old business car for a new business car. both are for the same business, same 90% business usage. how should i report it in Turbo Tax?
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Report it HAS IF YOU SOLD the older vehicle.
Use the Trade-in value as the selling proceeds.
Trade-in for a Business vehicle COULD be treated as a "Like-Kind" exchange years ago, but that was eliminated.
Be sure to add that trade-in value to the basis of the NEW vehicle.
So, if the new vehicle was 45,000 and you got 5,000 trade-in value, (so you had to give the Dealer 40,000)
report that the old vehicle was sold for 5,000
and the new vehicle was bought for 45,000.
Report it HAS IF YOU SOLD the older vehicle.
Use the Trade-in value as the selling proceeds.
Trade-in for a Business vehicle COULD be treated as a "Like-Kind" exchange years ago, but that was eliminated.
Be sure to add that trade-in value to the basis of the NEW vehicle.
So, if the new vehicle was 45,000 and you got 5,000 trade-in value, (so you had to give the Dealer 40,000)
report that the old vehicle was sold for 5,000
and the new vehicle was bought for 45,000.
thanks for the response, super helpful. one more caveat, my old business car still have loan on it, how to adjust the numbers?
just continue your example, new car is $45,000, old car has a trade-in value of $5000, but still has $2000 loan balance. means i need to give dealer $42,000 ($45,000 - $5000 + $2000) to get new car. Should I report old car sale as $5000? or $3000?
A loan is not relevant to the IRS. You don't get a deduction for owing money. The value of the car is the sales price, not the value minus the loan.
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