Do I have to claim my trade in price I received towards the purchase of a new truck on my taxes?

Question

I traded my over the road truck for a newer model. Say I got 10k for my trade in and borrowed 50k for the rest of the payment do I have to claim this as a sales on my taxes. I had my old truck for 6 yrs and it was fully depreciated. I would like to know so when taxes come due i'm not stuck with a big shock.

Answer 1

Technically, whenever you dispose of an asset, whether it is personal or business, you have to claim any gain on the sale of the asset. And if there was a loss on the sale of the asset, and the asset was a personal asset, then the loss is treated as a personal loss and is nondeductible.

The price you sell it for, or the trade in value you were given for it, is considered the sales proceeds. Your basis in the property is what you paid for it, less any depreciation you had claimed on it for business purposes in the past.

Using your fact pattern, and assuming some information:

Trade in value - $10,000
Original purchase price - $25,000
Assuming that the vehicle was never treated as business property and no deduction was taken in previous tax returns, your net gain/loss is calculated by taking the sales price ($10,000) and subtracting your basis in the property ($25,000) which gives you a nondeductible personal loss of $15,000. Nothing would be reported on your tax return.

You mentioned that the truck was fully depreciated. Does this mean that in previous years, you had claimed depreciation on the vehicle and taken it as a deduction on your tax return? If you did, then

Trade in value - $10,000
Basis in vehicle - $0 (fully depreciated)
You would then have a taxable gain of $10,000. This gain would be taxed as a long term gain since you owned the vehicle for more than one year (6 years in your words).

Answer 2

No, but if it's held by a business as your question implies, the basis for the new truck would be reduced since the old one had been fully depreciated.

Answer 3

It depends on whether you have deducted expenses for business use of the truck om prior returns. If this is strictly personal vehicle, then NO.

If it's for a business, it's complicated: you should see a tax advisor.

Answer 4

divide sales + tax fee by technique of $a million.0.5 the answer is the sales fee - if merchandise plus tax is $10.sixty 5 - then divide a million.0.5 answer is $10 - for unique fee if the truck fee is $35,000 to discern truck plus tax in a unmarried hit - - multiply by technique of one million.0.5 to discover it out for a separate line merchandise - tax in effortless words multiply by technique of .0.5

Answer 5

I have traded in many cars and have NEVER had to claim them on my taxes. I guess it could depend on what state you are in though?