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See what's trending for the November 15th deadline (Form 990) and resources for the upcoming tax season. View ProSeries Hot Topics.
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- entering new farm machinery with trade in
entering new farm machinery with trade in
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preparer227
Level 1
02-21-2022
01:04 PM
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Farmer traded a fully depreciated combine for total cost $120000, The trade in was $95000. and the boot paid was $25000. How do I enter this. Instructions for basis shows under deposition of Asset not to show trade in value however on all instructions I found I need to show $95000. on 4797 Part III then show $120000. as new asset basis and take 179 or Special Depreciation but that makes state of indiana crazy
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jeffmcpa2010
Level 11
02-21-2022
01:11 PM
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There is no reporting of this type of transaction as a trade for tax purposes any more.
The old asset is reported as sold for $95,000. The New Asset is a new asset purchased for $120,000.
The instructions you are reading are correct.
There is an advantage in this for the taxpayer, as instead of having $25000 to reduce future income for SE tax purposes, you get $120,000 to reduce future SE income. $95,000 x 15.3% savings is a pretty good deal.
