like kind exchange

[Auto]

I have an S Corp client who has a 100% business use auto on the books (2 years depreciated). Book value $21,000. He wants to trade a personal use auto for a new vehicle (trade in of personal vehicle $6,000, new vehicle cost $34,000) and then exchange this new vehicle for the previous 100% business use vehicle.

I believe this is a like kind exchange with a Form 8824 but what is the depreciable value of the new vehicle? Is the depreciable value of the new vehicle the book value of the old vehicle? He's not paying the S Corp any cash for the exchange.

Help from anyone greatly appreciated.

[BHoffman]

I have an S Corp client who has a 100% business use auto on the books (2 years depreciated). Book value $21,000. He wants to trade a personal use auto for a new vehicle (trade in of personal vehicle $6,000, new vehicle cost $34,000) and then exchange this new vehicle for the previous 100% business use vehicle.

I believe this is a like kind exchange with a Form 8824 but what is the depreciable value of the new vehicle? Is the depreciable value of the new vehicle the book value of the old vehicle? He's not paying the S Corp any cash for the exchange.

Help from anyone greatly appreciated.

Hi Auto - I can't agree that the personal use vehicle trade-in qualifies for like-kind treatment.

[Burke]

Me either. The shareholder would have to sell his vehicle to the corporation if his intention is to make it business property. Then the S-Corp could sell its vehicle to the shareholder if it wished.

[Auto]

Thanks for the replies

I did check with the IRS. You are correct. It is not a like kind exchange. Also TTB Delux Edition pg 16.6 specifically excludes a personal use auto being used in a like kind exchange. So I've been informed that he will show a gain of the book value against the total cost of the new vehicle. Thanks so much for your replies. Very appreciated.