Taxpayer is trading in an automobile used solely

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Reference no: EM131208265

A taxpayer is trading in an automobile used solely for business purposes for another automobile to be used in his business. The automobile originally cost $35,000 and he has taken $18,000 in depreciation. The old automobile is currently worth $20,000 and the new automobile the taxpayer wants in exchange is only worth $16,500. The other party agrees to give the taxpayer a trailer worth $3,500 in addition to the new auto. What is the taxpayer's gain or loss realized and recognized on the transaction and what is his basis in the new automobile received.

Reference no: EM131208265

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