Trading in your truck or van

Fkatz

Veteran Expediter
Charter Member
Offline
When you trade in your truck, van etc for the same. , you must file a form 8824 like kind exchanges and be figured as followed, I use only 12cent per mile to make it easier to explain:



TRADE IN OF ASSETS
Trade In of Assets
When a business asset is used as a trade-in for similar property, it is considered a like-kind exchange, reportable on Form 8824. Form 8824 determines whether any gain must be reported this year on the disposition of the old asset. Form 8824 also computes the basis in the new asset.
In most cases, you use this basis both for computing depreciation, and for computing the gain or loss on the eventual sale of the new asset. The exception to this rule is a trade-in of a "luxury automobile" that was used only partly for business. In this case you must make an additional adjustment to the depreciable basis of the new vehicle.
You must reduce the basis computed on Form 8824 by the excess (if any) of the depreciation that would have been allowable if the old car had been used 100% for business, over the depreciation that was actually allowable. This reduction must be made whether the taxpayer used the standard mileage rate, or actual expenses. If the standard mileage rate was used As the depreciation equivalent.
This additional reduction only applies to the depreciable basis of the new vehicle. The basis for computing gain or loss when the new vehicle is disposed of is the basis computed on Form 8824.
When completing Form 8824 you should enter 100% of the basis of the old and new asset even if they have less than 100% business use.

Example 1 – Standard Mileage Rate:
Mary bought a van in '04 for $29,000. Her mileage for each year is as follows:
2004 - 8,000 business miles, 12,000 total miles
2005 - 11,000 business miles, 15,000 total miles
2006 - 12,500 business miles, 17,000 total miles
2007 - 7,000 business miles, 10,000 total miles

In '07 she traded it on a new van that cost $35,000.The Dealer gave her a trade-in allowance of 20,000. She Paid an additional $15,000 cash. Mary computes her basis in the new van as shown:

Basis for gain/loss:
~ cost of old van $29,000
* less depreciation allowed:
'04 - 8,000 miles x .12 $ 960
'05,- 11,000 miles x .12 1,320
'06 - 12,500 miles x .12 1,500
'07 - 7,000 miles x .12 840


TotaL (4,620

equals remaining basis…………$24,380
* plus amount paid on new van …….$15,000
* equals basis for gain/loss …………….$39,380

Trade-in adjustment:
Depreciation at 100% use:
’04 – 12,000 miles x 12.. =$1,440.00
’05 – 15,000 miles x 12.. = 1,800.00
’06 – 17,500 miles x 12.. = 2,100.00
’07 – 10,000 miles x 12.. = 1,200.00

Total $ 6,540
* less actual depreciation (4,620)
* equals trade-in adjustment $ 1,920
Depreciable basis:
* basis for gain/loss $39,380
* less trade-in adjustment (1,920)
* equals depreciable basis $37,460

Example 2 - Actual Expenses: Joe bought a car in '05 for $23,000. He used it 80% for business each year. In '77 he trades it in on a new car costing $25,000. The car dealer gives him a $12,000 trade-in allowance on the old car. He finances
the remaining $13,000 cost of the new car.

Joe computes his basis in his new car as follows:

Basis for gain/loss:
* cost of old car $23,000
* less allowable depreciation (8,728)
* equals remaining basis $14,272
* plus amount paid on new car 13,000
* equals basis for gain/loss .... $27,272

Trade-in adjustment:
* depreciation at 100% use $10,910
* less actual depreciation (8,728)
* equals trade-in adjustment .... $ 2,182
Depreciable basis:
* basis for gain/loss $27,272
* less trade-in adjustment (2,182)
* equals depreciable basis $25,090

You can easily determine the depreciation for 100% business use by temporarily overriding the business use percentage on the Car and Truck Expenses Worksheet, or Form 2106 Vehicle
Expenses Worksheet to 100%, and then Quick Zooming to the Asset Life History for that vehicle.
Add the depreciation shown in the "Prior depreciation," and "Depreciation this year" columns on the line for 2007, also include any Section 179 expense elected. Remember to remove the override on the percentage of business use when you’re done.

Frank


Franklin Katz, ATP,PA, CPB
Frank’s Tax and Business Service
120 York Rd
Kings Mountain, NC 28086-3151
(704) 739-4039
Fax: (704) 739-3934



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Fkatz

Veteran Expediter
Charter Member
Offline
I fyou sell your truck outright, and not trade it in you are subject to capital gains tax on the profit.

The profit will be the difference between what you sell it for, less your cost plus recapture of the depreciation that was taken when purchased.

You normally would wind up with a loss, but it would also depend on how long you have your truck.

the capital gains tax is at 25% of the amount

If you trade in your truck, you do not have to pay any tax on it and it is called a LIKE- KIND EXCHANGE, whereby the tax is deffered until you are ready to sell the new truck that you traded it in for .

Frank
 

meciasmorocco

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Fleet Owner
Offline
To become a Forex trader, you need to seriously study the history of currencies, be able to conduct technical analysis of the market, and constantly monitor the economies of different countries in the world if you work with the currencies of these countries. Knowledge of the classic pivot point formula and other professional qualities will also be useful. But if you try, you can make a significant profit with a little effort. And the longer you are engaged in trading, the easier it will be for you to earn money.
 

danthewolf00

Veteran Expediter
Online
To become a Forex trader, you need to seriously study the history of currencies, be able to conduct technical analysis of the market, and constantly monitor the economies of different countries in the world if you work with the currencies of these countries. Knowledge of the classic pivot point formula and other professional qualities will also be useful. But if you try, you can make a significant profit with a little effort. And the longer you are engaged in trading, the easier it will be for you to earn money.
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