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Level 1
posted Mar 27, 2020 1:02:50 PM

Section 179

If I purchased a vehicle for my business in 2018, and elected to take 100% depreciation. Then the following year I trade in the vehicle for another for business use, will I potentially  have a recapture situation? So let’s say I paid $25k, and the following year, I purchase a $50k vehicle and trade mine in for $20k, and finance the remaining $30k. What would happen? 

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1 Replies
Expert Alumni
Mar 28, 2020 3:31:26 PM

Under the new tax law you can't defer the gain on the disposition of a vehicle into another vehicle.

 

See the IRS website: Like kind exchanges are now limited to real property.

 

You have to report your transaction as a sale of your old vehicle and then add the vehicle you received as a new asset.