How do you determine the adjusted basis of a new vehicle purchased with the old vehicle used as a trade in.?
Purchase price of new auto = $23,000
Trade in value of old vehicle = $9,500
Purchase price of old vehicle (5 years ago) = $23,000
3 of the 5 years took standard mileage deduction; 2 of the 5 years took actual expense deduction (depreciation). Business mileage use % averaged around 20 - 25% each year.
How do you compute the basis of the new auto?
Also, is there any gain/loss to be recognized or is the gain/loss used to compute the adjusted basis of the new auto?
Where in the asset worksheet do you enter the values determined above?