I have been stuck on this for a while and read all the previous articles but cannot find an answer that gives me what I need so a specific answer would be much appreciated.
I traded my 1 year old truck in 2022 on a new SUV. Both were used in my business for less than 50%. I need to know which figure to use for the car and truck worksheet, line 77 (entire basis of replacement or excess basis). In the easy step when I said the new car was part of a trade in, it asks for the "total cash and/or loan amount paid with the trade in."
I received 36500 for my truck, 28200 went to payoff my loan, leaving me 8300 down towards the SUV which cost 35169. So which of those numbers do I put? It doesn't seem to impact my tax due but does change the depreciation figures dramatically so I want to get it right for the future.
you sold your old truck for 36500
35169 for the new SUV - i'm assuming by the numbers you provided you either had to come up with cash of 26869, a new loan for 26869, or some combination totaling 26869 for the new SUV (35169-8300)
The figures you need were already provided ... you have a sale of the old vehicle and a separate purchase of the new vehicle. These are separate situations and can no longer be combined.
Thanks for your reply. I understand the transactions are now considered separate but I still don't know which number to use. Does that mean that in line 77 of the worksheet I would put the total purchase price of the new vehicle 35169?
there should be a gross amount they crredited you for the trade-in . that's what to used. the gross amount would then be reduced by any payoff but has no effect on tax basis if the new item
sale price new item $50000 - that's its tax basis
less trade in value $20000 that's the sale price of the old item (assume cost $30000 and depreciation $15000
add loan payoff $10000, no effect on anything
cash paid $40000
if you were making bookkeeping entries
new item debit $50000
loan payoff debit $10000
old item depreciation debit $15000
old item credit $30000
cash credit $40000
taxable gain credit $ 5000 (trade in value $20 - cost $30 + depreciation $15)
Thanks for your response but I still don't understand with your numbers. If I'm supposed to put in the gross sales price of the old vehicle that was $36500. Turbotax doesn't like it however saying its too much basis probably bc I received more than I paid for the new vehicle $35169. So for now I have put in $8300 which is the amount I was credited for after the loan payoff of the old vehicle. Any thoughts with my numbers?
When I enter the business info as part of the sale of business property it comes out as a loss and is erased.
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