Cars Bought For Cash Uk

Posted on December 15, 2011 by Admin
Cars Bought For Cash Uk

Cars Bought For Cash Uk

As an accountant and tax specialist for going on 20 years, I have received many phones calls from bookkeepers asking me how to get the new car on the books and the trade-in off. To do so, there are a few other considerations that come into play. Let's break them down.

The Trade-In Vehicle

By trading in this vehicle, you have sold it. Since you used it to purchase a similar asset, you can roll any gain on the sale into the new asset. Therefore, you need to determine if you have a gain on the sale, and if so, how much that gain is. The gain will be the trade-in value less your "book basis" of the vehicle. For instance, if you were given a $6,000 trade-in allowance for the vehicle and it had a $2,000 book basis, the gain on its sale would be $4,000.

What is the book basis of the vehicle? To determine this you need to know the original depreciable basis of the vehicle and the accumulated depreciation on it. If you bought the vehicle more than six years ago and used MACRS to depreciate it, you should not have any remaining basis. It should be fully depreciated. If you have had the vehicle fewer than six years but elected to take a Section 179 deduction the year you purchased it, you probably have no remaining basis. Once you have determined your basis, figuring your gain is simple.