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motohead125
New Member

Stopped using vehicle for business, however, it wasn't a trade in. The car was totaled in an accident, I used settlement to pay off loan. Purchased new vehicle.

When it asks me if I traded it in I should say "no" correct? Then have to figure a like kind exchange?
1 Best answer

Accepted Solutions
LeeM
New Member

Stopped using vehicle for business, however, it wasn't a trade in. The car was totaled in an accident, I used settlement to pay off loan. Purchased new vehicle.

You should say it was "not traded in" when answering that you stopped using that vehicle for business. However, you would not have to figure a like kind exchange, since you did not actually exchange that vehicle for another one.

You should "dispose" of that vehicle for your business. You can do that by selecting "Edit" next to the vehicle that was wrecked and enter the date it was totaled.

You will then enter your new vehicle as a new and separate asset and answer those interview questions to determine whether the mileage rate or actual expenses will yield you a bigger deduction.

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9 Replies
LeeM
New Member

Stopped using vehicle for business, however, it wasn't a trade in. The car was totaled in an accident, I used settlement to pay off loan. Purchased new vehicle.

You should say it was "not traded in" when answering that you stopped using that vehicle for business. However, you would not have to figure a like kind exchange, since you did not actually exchange that vehicle for another one.

You should "dispose" of that vehicle for your business. You can do that by selecting "Edit" next to the vehicle that was wrecked and enter the date it was totaled.

You will then enter your new vehicle as a new and separate asset and answer those interview questions to determine whether the mileage rate or actual expenses will yield you a bigger deduction.

View solution in original post

Kidteehello
New Member

Stopped using vehicle for business, however, it wasn't a trade in. The car was totaled in an accident, I used settlement to pay off loan. Purchased new vehicle.

it doesn't give me an option to mark it as not a trade in
roy4
New Member

Stopped using vehicle for business, however, it wasn't a trade in. The car was totaled in an accident, I used settlement to pay off loan. Purchased new vehicle.

This answer conflicts with the answer to similar questions. Some answers say you can count the new vehicle as a trade in or like kind exchange if the new vehicle was purchased in a reasonable time frame.
karicalloway
New Member

Stopped using vehicle for business, however, it wasn't a trade in. The car was totaled in an accident, I used settlement to pay off loan. Purchased new vehicle.

So how do you do this- as an exchange, which it isn’t. Just wondering because I have a similar situation
hbarone
New Member

Stopped using vehicle for business, however, it wasn't a trade in. The car was totaled in an accident, I used settlement to pay off loan. Purchased new vehicle.

I'm having the same problem. I used a vehicle for work and it was totaled. There is no option to edit vehicle was wrecked.
motohead125
New Member

Stopped using vehicle for business, however, it wasn't a trade in. The car was totaled in an accident, I used settlement to pay off loan. Purchased new vehicle.

So I believe what I did a couple years ago was reported the wrecked vehicle as a sale. Used the insurance check settlement as the sales price. I owed some depreciation recapture since I didn't hold the asset for at least 5 years. Then I deducted the sales tax for new vehicle purchase.
Susan80
Level 2

Stopped using vehicle for business, however, it wasn't a trade in. The car was totaled in an accident, I used settlement to pay off loan. Purchased new vehicle.

I'm in the same situation. Can I deduct mileage for the rental car that the insurance paid for?
michaelhennessey
Level 2

Stopped using vehicle for business, however, it wasn't a trade in. The car was totaled in an accident, I used settlement to pay off loan. Purchased new vehicle.

NO LONGER A VALID ANSWER. FOR 2018 THERE IS NO AUTO TRADE IN
michaelhennessey
Level 2

Stopped using vehicle for business, however, it wasn't a trade in. The car was totaled in an accident, I used settlement to pay off loan. Purchased new vehicle.

For 2018 taxes the old answers are not valid!

Your middle class tax cut means you pay ordinary gain on your trade in and depreciate your new. 

This means that you may no longer treat the trade-in of a business vehicle as a non-taxable event. Instead, when you trade-in an old vehicle for a new one, you must pay income tax on your gain, if any.

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