I normally tend to agree with Bill but based on the facts presented, I would hold off on my judgement for now.  If you properly valued the vehicle using a reliable source for valuations, I wouldn't be so quick to have your client pay some additional tax.  I know that I used to deal with a car dealership that used to never show a discount on the purchase of a new vehicle, but they used to inflate the value of the trade to net out to the same place.  So the moral of the story is, that trade in value may or may not represent the true value of the vehicle.