While I agree with this part: "that trade in value may or may not represent the true value of the vehicle."

I would point out this description: "a Truck distribution from his S corp"

In other words, did he get to decide the FMV from the S Corp to himself? And then he gets a higher value on trade in?

"The Kelly Blue Book value is $9500"

Trade in or Private Sale?

"The Fair Market Range for used cars is Kelley Blue Book’s estimate of what a consumer can reasonably expect to pay this week in their area for this year, make and model used vehicle with typical miles and options (or with the miles and options they specify), excluding taxes, title and fees, when buying from a dealer. Each dealer sets and controls its own pricing."

I look at this type of activity as similar to the basis in an inherited asset. If you inherit something and sell right away, you just established its FMV. I would point out that KBB specifically warns you that local area or regional markets and other conditions can affect the value of any vehicle.