Vehicle trade in for new business vehicle

[larsonyjd]

We are a sole proprietor and recently traded in a business vehicle that is used 60% of the time for business. I am confused on what to put in the sales price section and expenses of sale. We traded it in for the amount the loan was for. So it was an even trade. No extra or less. What are we supposed to put in these sections. Thanks

[DianeW777]

This will be considered a sale and the trade in value is the selling price. You can use the information below to enter your sale.

The way to report the sale (trade is not really recognized by the IRS any longer for equipment or vehicles) is as follows. You have all the records so it should provide you the detail to move forward.

1. All business miles for all years and then total miles for all years - divide business miles by total miles to arrive at your overall business use percentage for the life of the vehicle. You will use this percentage times the selling price (or trade-in value) to arrive at the business selling price. Use the same percentage to arrive at your business portion of the cost before depreciation. 
2. If you used the standard mileage rate, a portion of that rate represents depreciation. See the chart below to arrive at the depreciation portion for the business miles only. Otherwise total all of the actual depreciation used for all years.
3. When you go through the vehicle information in your business be sure to select 'Sold, disposed of, etc....' then do not indicate it was sold.  You must say 'Yes' it was converted to personal use.  This will eliminate any sales information in the vehicle it self.

Next enter your Sale of Business Property (do not enter any sales information in the vehicle asset)

1. Income at the top
2. Scroll down to Other Business Situations
3. Select Sale of Business Property
4. Select Sales of business or rental property that you haven't already reported.
5. Answer 'Yes' to Do all of the following apply...?
6. Enter your sales information, do not make an entry for depreciation (no zeros)
   1.  Description of the Property (Vehicle made/model/year)
   2. Sales Price/Sales Expenses 
   3. Date acquired and date sold
   4. Cost
   5. Depreciation