Trade in sales price and basis for new vehicle

[Benjamine]

Purchased a 2021 Chevy truck in May 2021 - cost was $50,357 and received trade in allowance of $25K.  Chevy driven for two rental properties during 2021 - Form 4562 shows 3.52% business use for Property A and 6.53% business use for Property B. 

In October of 2022, purchased a 2020 Ram Truck for $59,995 (not including tax, tag, etc.) and received $46,249  for trade of Chevy truck.  Cash paid $11,300. 

In 2022 used Chevy for 441 business miles for Property A.   Property B business miles was 581. Total vehicle was driven was 4257. 

I indicated in the interview 10/17/22 as the date vehicle (sold, etc.) - when I get to the question as to the

vehicle total cost - my confusion begins. 

1.  What is my Chevy total cost? Purchase price minus trade in allowance?

2.  What is my basis for loss/gain?

3.  I can figure the depreciation for the next screen once these questions are answered.

I then used the Ram truck for the remainder of 2022 for business mileage.   How do I compute the basis for the Ram going forward?

Thanks so much for any help! 

[Mike9241]

Purchased a 2021 Chevy truck in May 2021 - cost was $50,357 and received trade in allowance of $25K.  Chevy driven for two rental properties during 2021 - Form 4562 shows 3.52% business use for Property A and 6.53% business use for Property B. 

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like-kind exchanges have been eliminated for all but real property for the years 2018-2025.

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Chevy tax basis 50,357. on your 2021 return you may have needed to report the sale of the trade-in on if you took a business deduction for it or if there was  a gain on the personal portion the cost and sales proceeds would be allocated between business and personal use based on mileage for each to total mileage. if you use the standard mileage rate that included a depreciation amount that must be used to reduce the tax basis of the business portion otherwise use actual depreciation taken.

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In October of 2022, purchased a 2020 Ram Truck for $59,995 (not including tax, tag, etc.) and received $46,249  for trade of Chevy truck.  Cash paid $11,300. 

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tax basis is a ? + sales tax and any fes for titling the vehicle 

$46,249 + $11,300 doesn't come to $59,995 so i can't tell you what the true tax basis is

that $46,249 is treated as the sales price of the Chevy and you follow the above for how to report

split the proceeds and cost based on business and personal mileage to total mileage.

gain on personal portion is taxable loss is not deductible. the business portion must be reduced by the depreciation and you then have a gain or loss for tax purposes on the business portion

again if you used the standard mileage method there is depreciation 

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see this link if you need standard mileage depr  - page 24 2022 is also .26/business mile.

https://www.irs.gov/pub/irs-pdf/p463.pdf 

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In 2022 used Chevy for 441 business miles for Property A.   Property B business miles was 581. Total vehicle was driven was 4257. 

I indicated in the interview 10/17/22 as the date vehicle (sold, etc.) - when I get to the question as to the

vehicle total cost - my confusion begins. 

1.  What is my Chevy total cost? Purchase price minus trade in allowance?

2.  What is my basis for loss/gain?

3.  I can figure the depreciation for the next screen once these questions are answered.

I then used the Ram truck for the remainder of 2022 for business mileage.   How do I compute the basis for the Ram going forward?

[Benjamine]

Mike - thanks for the quick reply.  I'm still thoroughly confused and I've created a nightmare for myself.   It may be easier if I ask individual ?'s as I try to sort through this mess.  Had a 2001 Jeep that was used in both rental properties for several years.  In 2021, I used it one time to each property for business. Jeep was traded in (along with Chevy) in October 2022.  I DID NOT convert to personal use in 2021 so it still appears on my interviews. 

I had taken straight line depreciation over the years so I assume I dispose of it under "sales of business assets".  Last year (another issue) TT folks suggested I choose the first option "Sales of Business or Rental Property, etc." rather than the second option of "Recapture of previously taken Section 179 or listed property".   Use varied over the years but averaged 10% or less each year. 

Can you confirm this is the correct selection?  If so, is the "Cost of Property" the original purchase price or the business used based on the fair market value at the time the Jeep was placed in service?   And, do I fill out the interview for each property separately or join the total business use for both?

Sorry to be a dunce but the screen is so different than the interviews under rental property. 

Much thanks!