Would you treat trade-in of bus vehicle for purchase of new one as two separate events, or link through like-kind exchange form? Do you complete bottom of Car/Truck Worksheet? Sch C taxpayer turned in vehicle and received $18,000 toward new one.
You could use Form 4797 to calculate report the sale of the first vehicle for $18,000, then set up depreciation for the new vehicle based on full purchase price.
You can treat it as an exchange, in which the boot paid is $18,000 less than the full purchase price of the new vehicle.
The exchange appears to result in less current tax.
The basis of the new auto will be your adjusted basis of the trade in plus any additional cash you gave to acquire the new vehicle. What's messy is that IRS says that the exchanged basis is depreciated over the remaining recovery period of the relinquished property using the same method and convention as the relinquished property and the excess basis, usually attributable to the additional cash is separately depreciated as if originally acquired in the year of replacement. Reg 1.168(i)-6(j).
Yes, I think if you fill out lines 47-60 of the associated car & truck worksheet the program will fill in the correct forms for you. Then you need to set up the new vehicle.
I used the Elect out of regs Sec 1.168(i)-6T(i) option on Line 40 of Auto worksheet for both vehicles, but it still depreciates orig. vehicle for entire year that was traded-in (in January). Should I be marking box 43 for either vehicle on that worksheet? I listed entire Basis on Line 30 for the new vehicle, and the amount of that that is excess basis on line 41 (provided from Form 8824). If it depreciates both isn't it deducting too much?
