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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10173
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Turbotax Business is telling me my Section 179 deduction is

Customer Question

Turbotax Business is telling me my Section 179 deduction is too large. But it helped me calculate the basis and put the value in
JA: Thanks. Can you give me any more details about your issue?
Customer: I purchased a vehicle with a trade in for 33,500 using a fully depreciated trade valued at $18,000. it told me the basis of new was $31,000 and I'd have to report a gain on sale of old vehicle of $15,500 and a deferred gain of $2,500, which I did
JA: OK got it. Last thing — Tax Professionals generally expect a deposit of about $32 to help with your type of question (you only pay if satisfied). Now I'm going to take you to a page to place a secure deposit with JustAnswer. Don't worry, this chat is saved. After that, we will finish helping you.
Submitted: 9 months ago.
Category: Tax
Customer: replied 9 months ago.
I thought you were online right now otherwise I would not have paid. I don't have time to wait until tomorrow
Expert:  Mark Anderson replied 9 months ago.

I don't think you have correctly entered the information. You should not have a gain of that much if you paid or financed the vehicle. How much did you get for your trade?

Customer: replied 9 months ago.
$18000
Customer: replied 9 months ago.
Turbotax calculated everything for me then told me it was too much 179
Expert:  Lane replied 9 months ago.

Hi Lisa ... This questions just popped out to the question for other experts.

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If you a re trading in the vehicle and then using the replacement vehicle for business as well. there should be NO gain.

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This is considered a like kind exchange.

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You don't pay tax in the year in which the exchange occurs. Instead, you reduce the tax basis of the replacement asset you acquire by the gain you deferred on the trade-in of the old asset. When you eventually sell the replacement asset, the amount of gain will be larger or the loss will be smaller based on the exchange.

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I'm not intimately familiar with Turbotax - I use one of intuit's professional tax packages with my clients - but let me see if I can I can find something in the knowledge base.

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But again, if this was a trade in of a business vehicle (regardless of whether you 179'd the vehicle or depreciated it normally), the gain is deferred, as long as you didn't take any cash out or decrease the level of financing.

Customer: replied 9 months ago.
That was what I thought and how I recorded it originally but when I entered in turbotax it kicked out different info.
Expert:  Lane replied 9 months ago.

I've been looking for something TTax specific, still think I can find something ... Again, I can help you with any tax, corporate or estate law question, but we're not Turbotax help desk folks

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Give me a few more minutes if you would ... I think I remember finding something before about having to dispose of the asset first and then answering questions in TTax.

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But, again, this is a classic IRC §1031 like kind exchange. You can hang your hat on the legality of it ... I'm still looking for something from intuit

Expert:  Lane replied 9 months ago.

Ok found this from intui:

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When you exchange (trade) business or investment property of the same nature or character (for example, vehicles or real estate), it's called a like-kind exchange. This gets reported on IRS Form 8824.

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Generally, there is no taxable gain from a like-kind exchange.

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Then, there was this link:https://ttlc.intuit.com/questions/3066351-where-do-i-enter-a-like-kind-exchange-form-8824

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Which says:

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Where do I enter a like-kind exchange (Form 8824)?

To get to the like-kind exchange section in TurboTax:

  1. Open (continue) your return.
  2. In the search box, search for like kind (2 words, no dash) and then click the "Jump to" link in the search results.
  3. On the Any Other Property Sales screen, check the Any additional like-kind exchanges box and click Continue.
  4. Answer Yes on the Like-Kind Exchanges screen and follow the onscreen instructions. We'll fill out Form 8824 for you.
Expert:  Lane replied 8 months ago.

I hope this has helped.

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Please let me know if you have any questions at all.

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If this HAS helped, and you DON’T have other questions … I'd really appreciate a positive rating (using the rating request, faces, or stars on your screen)

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That's the only way I'll be credited for the work here.

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Thank you!

Lane

I hold a JD (Juris Doctorate, a doctoral degree in the law), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance & tax, as well as CFP® and CRPS designations. - I’ve been providing financial, Social Security & Medicare, estate, corporate & tax advice since 1986.

Expert:  Lane replied 8 months ago.

Hi,

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I’m just checking back in to see how things are going.

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Did my answer help?

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Let me know…

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Thanks

Lane

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