Traded F250 for F350 Truck

[Absolut]

I use Pro series:

The old truck 03 Ford F250 was bought on 05/20/03 for $34,105.00, since than including this year $21,009.00 was taken for depreciation.

New Truck 05 Ford F350 details:

Sale Price is $38,995.00

Downpayment detail: Trade-in of 03 Ford F250:
Gross Allowance: $20,000.00
Less Amoung owing: $16,622.00
Net Trade-in of: $3,367.00

Unpaid Balance of Cash Price: $32,328.00

Cost of Single Interest Insurance = $ 55.00
Sales Tax = $949.75
Certificate of title Fees = $ 23.00

Amount Financed = $33,355.75

#1. In Pro Series you can enter the Sale price $20,000.00 and it takes care of the accumulated depreciation, which shows a gain of $6904.00. Is this correct?

#2. Can enter the new truck as a new vehcile, taking $32,328.00 - $16,622.00 (balance left owing) to give me a cost basis of $15,706.00 to depreciate?

Hopefully I haven't made this confusing.

[jainen]

Yes, you did

>>Hopefully I haven't made this confusing<<

Yes, you did make it too confusing by trying to include the finance amounts in the calculations.

His gain was $6904, but this is deferred because it is a 1031 exchange. The new truck costs $40,023 including tax and fees. His new basis is that minus the deferred gain, or $33119.

Another way to look at it is to say he got 20K for the old truck and needs $20,023 more--it doesn't matter whether he ponies up the cash and just signs for it. So his new basis is the old adjusted basis ($13096) plus the new money, total of $33119.

As I have said so many times, in a 1031 exchange you must completely ignore the mortgages.

[Absolut]

Sale of trucks

>>Hopefully I haven't made this confusing<<

Yes, you did make it too confusing by trying to include the finance amounts in the calculations.

His gain was $6904, but this is deferred because it is a 1031 exchange. The new truck costs $40,023 including tax and fees. His new basis is that minus the deferred gain, or $33119.

Another way to look at it is to say he got 20K for the old truck and needs $20,023 more--it doesn't matter whether he ponies up the cash and just signs for it. So his new basis is the old adjusted basis ($13096) plus the new money, total of $33119.

As I have said so many times, in a 1031 exchange you must completely ignore the mortgages.

Thanks Jainen. Would I do the 1301 exchange on Form 8824? Do you use ProSeries?

[jainen]

Mostly

Mostly I use Lacerte but I have about 25 returns I do on Proseries Basic.

You are supposed to use Form 8824, but you always end up with orphan names and pieces of basis scattered around. Stay away from Form 4797, too. Just delete the old truck and add the new one, and keep paper notes about how you arrived at the new basis.

[Absolut]

F250 to F350

Mostly I use Lacerte but I have about 25 returns I do on Proseries Basic.

You are supposed to use Form 8824, but you always end up with orphan names and pieces of basis scattered around. Stay away from Form 4797, too. Just delete the old truck and add the new one, and keep paper notes about how you arrived at the new basis.

Thank you again for your help.

I wish clients would just keep their vehicles until they're fully depreciated, instead of buying and selling every two years. Arhhhhhh. I can't wait for "D" day to get here.... I've filed over 40 extensions already, and still have some coming in. I'll still be doing taxes in July probably.