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Discussion Forum Index --> Tax Questions --> Trading in 179 vehicle
Paparich (talk|edits) said:
| 18 December 2006
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| I purchased a vehicle 1 month ago with intention to 179, besides not liking some things about the truck , I want to trade it in and get a diesel immediately before the updated (2007) diesel engines are all you can get. this will be a slightly more expensive truck. I should be able to use the new vehicle in a business function before the end of the year. Will this get real confusing? will I be able to get any credit for the use of the vehicle I will be trading in? They will give me $24000 for the trade (which I owe $23000) and I will be getting a $30,000 vehicle, will I only be able to 179 $6,000. Thanks, Rich
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Solomon (talk|edits) said:
| 18 December 2006
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| Did you use the one month old vehicle in your business? Does not sound like it. However, if used in a business, then you will have a Like Kind Exchange. If not used for business purposes, then the trade is simply for personal purposes. Your new vehicle, if used in a business might be eligible for Sec. 179. Depending upon the type will determine how much - as well as per cent business use. The year purchased and placed in service for business purposes is what will qualify it for 179.
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Lhhesscpa (talk|edits) said:
| 18 December 2006
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| The don't believe there's a MACRS deduction if the asset is purchased & disposed of in same year. There wouldn't be any Sec 179 deduction either because of recapture. A trade-in is a Sec. 1031 tax-deferred exchange. The basis of the new vehicle will be the total of the cash paid plus the loan on the new vehicle plus the adjusted basis of the vehicle traded in minus loan on the vehicle traded. If there was no business use of the trade-in, it's adjusted basis would be cost. If the standard mileage rate is used for a deduction for the business use of the trade-in the depreciation component of the rate is, I believe, $0.14/mi. --Larry Hess, CPA | Albuquerque, NM - Talk to me
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Solomon (talk|edits) said:
| 18 December 2006
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| LH - it is $0.17 but based on his statement that he might be able to use new vehicle in business before year end implies he did not use the first one in business.
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Lhhesscpa (talk|edits) said:
| 18 December 2006
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| Solomon: You stimulated me to look up the authority, Rev. Proc. 2006-49, Sec. 5.05, which says "For owned automobiles placed in service for business purposes, and for which the business standard mileage rate has been used for any year, depreciation is considered to have been allowed at the rate of 16 cents per mile for 2003 and 2004, 17 cents per mile for 2005 and 2006, and 19 cents per mile for 2007...." Thanks, I like to learn. --Larry Hess, CPA | Albuquerque, NM - Talk to me
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Paparich (talk|edits) said:
| 18 December 2006
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| yes, I did use the one month old vehicle for about 600mi of business purpose (~68%). You all are fast with the responses, Thanks
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