Sale of fixed asset by trade in with a supplier
Trunxson
Member Posts: 2
I have a camera lens, one of my fixed assets, that I have disposed of but as it is less than a year old have not applied any depreciation.
I sold the old lens by trading it in but in doing this got more than I paid for it . The Seller has issued me with a receipt showing the new lens and the old as traded Part ex.
How does Wave handle a fixed asset process in this example
Old lens purchase receipt 1500
Old lens trade in 2000, gain 500
New lens purchase price 4500
Total of new receipt 2500
0
Comments
If you are in the US, IRC 1031 allows taxpayers to exchange like kind property tax free. In your example above the have a gain of $500 which is deferred. The $500 reduces the basis of the new property. You cost basis for the new lens is $4000. Original cost less deferred gain. I'm assuming you paid out $2500. You would add that additional amount to your cost basis of your original purchase. $1500+$2500=$4000. Form 8824 will need to be completed. Please let me know if you have any questions or tax assistance. I am able to service client throughout the US.