Han purchased new droids to replace two old droids he purchased for $10,0000 apiece from Jawa Equipment Distributing Inc. (JEDI) in 2013. JEDI will give Han $2,000 apiece for a trade-in on the purchase of two new droids. The new droids costs $20,000 apiece and are used 100% for business. The old droids have always been used for personal purposes and not business. Han placed them in service on December 31, 2019.

What are the tax issues involved?