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leo11_2
Employee
April 2, 2023
Solved

i trade in my old business car for a new business car, how should i enter in turbo tax?

  • April 2, 2023
  • 1 reply
  • 0 views

i traded in my old business car for a new business car. both are for the same business, same 90% business usage. how should i report it in Turbo Tax? 

    Best answer by KrisD15

    Report it HAS IF YOU SOLD  the older vehicle. 

    Use the Trade-in value as the selling proceeds. 

     

    Trade-in for a Business vehicle COULD be treated as a "Like-Kind" exchange years ago, but that was eliminated. 

    Be sure to add that trade-in value to the basis of the NEW vehicle. 

     

    So, if the new vehicle was 45,000 and you got 5,000 trade-in value, (so you had to give the Dealer 40,000)

    report that the old vehicle was sold for 5,000

    and the new vehicle was bought for 45,000. 

     

     

     

     

    1 reply

    KrisD15
    KrisD15Answer
    April 2, 2023

    Report it HAS IF YOU SOLD  the older vehicle. 

    Use the Trade-in value as the selling proceeds. 

     

    Trade-in for a Business vehicle COULD be treated as a "Like-Kind" exchange years ago, but that was eliminated. 

    Be sure to add that trade-in value to the basis of the NEW vehicle. 

     

    So, if the new vehicle was 45,000 and you got 5,000 trade-in value, (so you had to give the Dealer 40,000)

    report that the old vehicle was sold for 5,000

    and the new vehicle was bought for 45,000. 

     

     

     

     

    **Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"
    L
    leo11_2Author
    Employee
    April 3, 2023

    thanks for the response, super helpful. one more caveat, my old business car still have loan on it, how to adjust the numbers?

     

    just continue your example, new car is $45,000, old car has a trade-in value of $5000, but still has $2000 loan balance. means i need to give dealer $42,000 ($45,000 - $5000 + $2000) to get new car. Should I report old car sale as $5000? or $3000?

     

    AmyC
    AmyC
    Employee
    April 3, 2023

    A loan is not relevant to the IRS. You don't get a deduction for owing money. The value of the car is the sales price, not the value minus the loan.

    **Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"
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