Trading a vehicle for a truck...how is that handled tax wise?

[justmjc]

I have a 94 mustang for trade in return for a 1996 dodge 2500, which is my brother in laws vehicle. I'd like to take the $6500 he wants for it, and use that as a tax write off for the business. But, if I trade, can I still write that off? Should I create a bill of sale, even though no money will change hands? Is it ligit or not? Any suggestions how I can obtain the write off?

[twins_lawn_care]

I would think if you are trading, it is the equivalent as purchasing it for the $6500 like you stated. YOu can get a bill of sale for it, and he your's, handle the taxes appropriately from there out.
i am not too familiar with this, so take my advice for what you paid for it.
Good luck, and let us know what you find out.

[specialtylc]

Yes you can write it off. At tax time just put it your schedule of depreciation.

[missytheaccountant]

If it is your personal vehicle, there will be no tax write off. Since gains on personal property aren't taxed, then losses aren't as well. However, if your business is a S-corp, LLC, etc. then it would be treated as a like-kind exchange and the gain/loss would roll over into the basis for the new vehicle. Sorry, but without more details, it doesn't seem like to me that you will be able to count a loss.