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Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 3014
Experience:  18+ years of experience in tax preparation; 25+ years of experience as a real estate/corporate paralegal.
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What do I put in tax return blank -like kind property when a

Customer Question

What do I put in tax return blank for FMV-like kind property when a car was traded in and another care was purchased both for business
Submitted: 1 year ago.
Category: Tax
Customer: replied 1 year ago.
On the IRS form 8824 for FMV- like in kind property: the form is asking for me to input what property was traded in for what property. I traded a vehicle in after 11 months in last year that was in use for business purposes and got a new one for business purposes that was in use for one month last year. What do they want me to put here?
Customer: replied 1 year ago.
I am using Turbo Tax edition on line
Customer: replied 1 year ago.
Posted by JustAnswer at customer's request) Hello. I would like to request the following Expert Service(s) from you: Live Phone Call. Let me know if you need more information, or send me the service offer(s) so we can proceed.
Expert:  Barbara replied 1 year ago.

Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

I have made an Additional Services offer for a phone call, but please see the following information which may assist you:

Example:

  • You trade in your old vehicle with an adjusted basis of $3,000.
  • The fair market value (FMV) of the new vehicle is $7,500.
  • The dealer allows a $3,500 trade-in allowance for your old vehicle.
  • You pay $4,000 cash for the new vehicle (FMV of new vehicle $7,500 minus $3,500 trade-in allowance).

Your gain is $500.

Figured as follows:

  • FMV of $7,500 (new vehicle) minus
  • $7,000 ($3,000 adjusted basis of your old vehicle plus
  • $4,000 cash you paid) equals
  • $500 gain.

The depreciable basis of the new vehicle is $7,000.

Figured as follows:

  • Cash you paid, $4,000 plus
  • Adjusted basis of the old vehicle, $3,000.

The $500 gain on the trade-in is deferred because it reduces the basis of the new vehicle. If you sold the new vehicle the next day for $7,500, you would recognize the $500 gain at that time ($7,500 minus your adjusted basis of $7,000).

http://loopholelewy.com/loopholelewy/02-business-deductions/car-expenses-07a-should-you-trade-in-vehicle.htm

If you accept the offer of a phone call, please provide your telephone number and the best time to call you. I am located in Florida--EDT.

Thank you and best regards,

Barb

Expert:  Barbara replied 1 year ago.

Just following up with you to see if you have any other questions. If so, please come back to me here at your convenience, and I will be happy to assist you.

If not, please take a moment to rate my answer since that is the ONLY WAY I RECEIVE CREDIT FOR ANSWERING YOU AND ALERTS JUST ANSWER TO COMPENSATE ME FOR PART OF THE MONEY THAT YOU HAVE ALREADY PAID.

Best regards,

Barb