Like Kind Exchange

[Bart]

I have a client who traded one car (A) in on another car ( B ). B cost 30,000 and had 15,000 depreciation taken on it. A cost 40,000. Basis of A should be 55,000 (40,000 + 15,000) I think. I fill out the asset disposition sheet in ATX and it fills out the 8824. On page 2 of the 8824, it shows basis of like kind propert received as 25,000 because it is subtracting the adjusted basis of B of 15,000 instead of adding it. Is the basis of A 55,000? How do i get ATX and the 8824 to show that?

[OldJack]

Remember your basis in the new automobile should only be the net book value of the old vehicle plus the cash paid and debt on the new vehicle. Trade-in value is a bogus number as is the sale price of the new vehicle.

[jainen]

>>Basis of A should be 55,000 (40,000 + 15,000)<<

No, depreciation reduces basis.

I do think you need to know the trade-in value so you can determine if there was gain or loss to defer. You can calculate the basis of the new car the way OldJack says, adjusted basis (25000) plus new money (unknown without the trade-in value), or as Cost (30000) minus deferred gain (unknown without the trade-in value).