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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28081
Experience:  Taxes, Immigration, Labor Relations
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We sold a car in 2015 that was used . prior to

Customer Question

we sold a car in 2015 that was used for business. prior to selling that car, we bought another car and used that for business. there was some overlapping time when we had both cars and both were used in business. do I need to fill out form 8824?
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Submitted: 6 months ago.
Category: Tax
Expert:  Lev replied 6 months ago.
If you sold the car for cash - and it was not exchanged for another car - that sale doesn't qualify for section 1031 like-kind exchange and no need to use form 8824.In this case - you will simply report the sale of your car on form 4797.
Customer: replied 6 months ago.
thanks, ***** ***** using turbo tax and I did say that it was not an exchange, but it keeps asking me to answer questions on form 8824! I think it must be a bug in the system and don't know how to get around it
Customer: replied 6 months ago.
let me clarify. we own a business and use a van for business. we sold a van and bought another van. except, the second car was purchased prior to selling the first car. so you still think I shouldn't fill out 8824?
Customer: replied 6 months ago.
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Expert:  Lev replied 6 months ago.
Section 1031 like kind exchange ( that is reported on form 8824) allows to defer the gain realized of selling some business or investment assets instead of reporting taxable gain in teh current year.For instance if you sell a property and realized a gain $10,000 - but instead you properly arrange section 1031 exchange - so without receiving cash - you exchange for another like-kind replacement property with larger value - that gain is not recognized - but deferred until you will sell that replacement property.There are special rules how that section 1031 transaction must be accomplished - the teh main requirement - you should NOT receive cash for the old property. If you do - that is NOT section 1031 exchange.In your situation - the tax preparation software is guiding you through teh tax regulation and each following question is based on your prior answer.I do not think that is a bug - but most likely you misunderstood the question and answered it in such a way that the software is "thinking" that you are eligible for section 1031.But based on your information - - the sale and purchase are separate transactions - you do NOT qualify for section 1031 and do not need to use form 8824.I am sending you Phone Call Service required based on your reply - please verify and accept.If that was requested by mistake - just ignore that required..I appreciate if you take a moment to rate the answer.Experts are ONLY credited when answers are rated positively.If you still have any doubts, need clarification - please be sure to ask.I am here to help you with all tax related issues.