Tax Law (Questions About Taxes)/Like-Kind-Exchange


Last December we exchanged a vehicle we had bought in 2005 which was used about 50% in our business. We were given $1000.00 for the old vehicle which was applied to the purchase of the newer one. Do I need to do a Like-kind-exchange? We use Turbo Tax for our small business and they are asking if there was a trade in and asking 'cash, or loan amount, paid with trade-in' not at all sure what this means. I'm getting the impression if one trades one vehicle for another we have to do the like-kind or the $1,000.00 will have to be declared as income. (We have always done the mileage deduction)  Thank you


Thanks for your question.

If you received the $1,000 in cash you do not have a like kind exchange, but a sale of your asset.  You would subtract 1/2 of your adjusted basis (representing the business portion) from $500 to determine your gain or loss on the business portion.  Basis would need to be adjusted based on the mileage previously claimed.  The $500 applicable to the personal portion would not be of consequence, as the personal portion has its original cost as basis and a loss on a personal use asset is not deductible.

If you received it as a trade-in allowance, you would apply 1/2 of the adjusted basis of the old to the new vehicle plus 1/2 of the purchase price to determine the basis in the new vehicle.

Hope this helps.

John Stancil, CPA  

Tax Law (Questions About Taxes)

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John Stancil, CPA


I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at I also offer seminars and consultations to churches and clergy on their tax issues at Also visit my blog, I am listed on Tax Connections at Prepare and file your own taxes at


I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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