How is everyone entering the 2018 trade-in of partial business use luxury vehicle in proseries 2018?

[Fosterconsult]

Pub 544 not final yet.  ProSeries is wanting me to a like-kind exchange, but tax reform states only real property is used for Form 8824.  Should I calculate the business use percentage for all years, the mileage depreciation rate for ALL miles since it's a luxury vehicle, and enter on the "enterable" Form 4797 and Sch D as applicable to figure gain/loss?  Then enter the full purchase price of the new vehicle on the Car/Truck worksheet?

[TaxGuyBill · Accepted solution]

This is what I would do:

1. Enter disposition date on Asset Entry Worksheet.  Do NOT enter any sales information.
2. Calculate total actual depreciation taken for all years.  That may include the built-in amount if the Standard Mileage Rate was used, or the actual amount of depreciation if the Actual Expenses were used (don't forget to include the current year).
3. Calculate the average business percentage (combined business miles for all years divided by combined all miles for all years).
4. Original cost multiplied by average business percentage equals Unadjusted Business Basis.
5. Total sales price multiplied by the average business percentage equals Business Sales Price.
   
6. Open the "Enterable 4797" and enter the Unadjusted Business Basis (#4 above), the amount of business depreciation (#2 above), and the Business Sales Price.
   

I would not enter anything on Form 8949/Schedule D because the personal loss is not deductible (and it is extremely unlikely the personal portion was sold at a gain).

The fact it was a Luxury vehicle does not matter for purposes of the sale.

Yes, enter the full purchase price for the new vehicle as a new vehicle on the Car/Truck worksheet.

[Fosterconsult]

Yes I understand that I cannot take a personal loss.  As for step 2, the built in factor for depreciation is applied to ALL miles since it is a luxury vehicle?  Thanks for your prompt and clear answer.  That is what I thought but needed confirmation.  Thanks Tax Guy Bill!

[TaxGuyBill]

Depreciation is only taken on business miles, not personal miles.  A Luxury vehicle does not change that.

[Fosterconsult]

I have calculated the depreciation for all years and the business percentage of the sales price and cost (vehicle had some personal use each year).  When I go to enter these calculation into the enterable Form 4797 I get an error stating that only gains are to be reported in Part III.  Where would I enter the information to report the loss?  Do I enter on Page One under the Section 1231 property?