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Article Date:
May 2006

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Trade-In of Car on Lease

On April 10, 2004, I bought a car for $18,980. In 2004, I drove the car 21,000 business miles and 3,000 personal miles. I deducted the car expenses using IRS mileage rates. In early January 2005, I traded this car on a lease, got a check for $3,200, and a credit toward the lease of $4,000. (Thus, the dealer gave me $7,200 for the car.) Do I have some tax issues here? (B.B., Winfield, IL


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