Part II $(19$ points$)$:

Nick had a general purpose truck $("$Old Truck"$)$ that he used in his sole proprietorship. Nick originally acquired the Old Truck in $2020$ by paying $\backslash (\backslash$$ $31,980\backslash )$ in cash, performing consulting services for the seller worth $\backslash (\backslash$$ $1,800\backslash ),$ and financing the remainder of the purchase price with a $\backslash (\backslash$$ $9,700\backslash )$ loan. During $2023,$ Nick traded in the Old Truck to a car dealership while purchasing a used general purpose truck $("$Used Truck"$).$ Nick and the car dealership are unrelated to each other. As part of the exchange of equal values, the dealership gave Nick a trade$-$in allowance of $\backslash (\backslash$$ $7,800\backslash )$ for the Old Truck $($i$.$e$.,$ credited $\backslash (\backslash$$ $7,800\backslash )$ against the total purchase price for the Used Truck$)$ and assumed the remaining $\backslash (\backslash$$ $1,400\backslash )$ outstanding balance of his liability $($i$.$e$.,$ the unpaid balance of the $\backslash (\backslash$$ $9,700\backslash )$ loan that Nick took out when he acquired the Old Truck in $2020).$ After accounting for the trade$-$in allowance and assumed liability, Nick still had to transfer $\backslash (\backslash$$ $5,700\backslash )$ in cash to the dealership in order to pay for the Used Truck. Nick properly took $\backslash (\backslash$$ $33,462\backslash )$ of depreciation on the Old Truck. Finally, Nick had to pay the government a $\backslash (\backslash$$ $65\backslash )$ fee to transfer the Old Truck's title to the car dealership.

The car dealership, which operates as a sole proprietorship, had acquired the Used Truck at an auction during $2022.$ The dealership paid $\backslash (\backslash$$ $5,400\backslash )$ for the Used Truck, $\backslash (\backslash$$ $190\backslash )$ as a fee to the auctioneer, and $\backslash (\backslash$$ $1,700\backslash )$ to enhance the Used Truck during the process of getting it ready for sale. The car dealership uses a

specific identification method for its used vehicles and paid its salesperson an $\backslash (\backslash$$ $830\backslash )$ commission for the sale of the Used Truck to Nick.

Required: Explain what amount, if any, Nick and the car dealership must include in their respective gross incomes for $2023$ from these transactions and what basis, if any, Nick had in the Used Truck and the car dealership had in the Old Truck immediately after the transaction.