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April 3, 2022
Question

Should I enter the gross trade in value of my car, which I used partly for self-employment in 2021, for the sales price?

  • April 3, 2022
  • 1 reply
  • 0 views
For example, my gross trade in value for my Volkswagen was 1,500 but I owed more than that on it so I didn't really use any of that towards my new car. I calculated that I used my Volkswagen for business purposes about 10% of the time in the 3 months that I had it during 2021. Would it be correct of me to put $150 for the sales price?

1 reply

April 4, 2022

Yes.  Business percentage of the trade in value should be used.

 

You have to treat the trade-in as a sale and report it as such on your return and then enter the new car as a new asset in TurboTax.

 

The trade in value would be considered the sales price of the business vehicle given up to acquire the new vehicle. The difference between that value and the cost of the vehicle, less depreciation, will be the gain or loss that you would recognize on your tax return for the disposition of the vehicle.

 

You will add the new vehicle to be used in the business in the "Business Vehicle Expense" section which is found where you enter your business expenses.

 

The best practice would be to dispose of the asset when you are no longer using it. 

 

To do this in TurboTax,

  • from the left menu, select Federal>
  • Income & Expenses>
  • Self-Employment Income & Expense click Revisit>
  • Pick your business and click Edit>
  • Scroll down to the expenses to Vehicle and click Edit
  • On the Vehicle Summary, next to the vehicle, click Edit
  • Check the box for I stopped using this vehicle in 2021

 

@edgarneri08

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