Sch c filer with leased car trade in

[pat]

Sch C filer with an existing vehicle that was a lease was traded in for new leased vehicle - new leased vehicle on 2106 car truck worksheet and tied it to Sch C.  business/personal dispositions are entered on depreciation/dispositions screen for trade in. Is this correct or is a trade-in exchange allowed and how to enter it with what basis? Second: Do I have to setup amortization of the capitalized cost reduction pmt or can I just include it in my lease payments entry?

[George4Tacks · Accepted solution]

No more trades, except real estate.

Sell the old vehicle with either a gain or loss

Buy the new vehicle and set up new depreciation  

[TaxGuyBill]

If both vehicles were leases, there isn't a sale, purchase, or depreciation (but there may be amortization of purchase costs).

[rbynaker]

I'm intrigued by the concept of linking a 2106 to a Schedule C.  Must be a Lacerte thing.

[pat]

It is a Lacerte thing. Other software I have used made this type of transaction much easier. Not depreciable so it is added on the 2106 screen and linked to Sch c
Tax guy bill - I think there is a sale purchase and amortization - taxpayer has taken standard mileage for old leased car and will for new. There is a business gain and a disallowed personal loss on old car. I think I have to amortize the capitalized cost reduction and maybe the cash down pmt.

[TaxGuyBill]

No, if the taxpayer is leasing the vehicle (paying rent to drive it), there is no sale or purchase.

If you are using the Standard Mileage Rate, there is nothing to amortize either (that would only be used if you use the Actual Expenses).