A Tax Question

[Texas Star]

Last year, I sold a car. Do I have to report this on my taxes? I already owned it (for years) , and got no more than the practical value. In fact, I sold it to my son for probably less than a dealer would have given, and he's stil paying on it, so I didn't receive the full value last year.

What, if anything, do I report on my Form 1040...or whatever? I don't see how this is a Capital Gain, but do I have to report as income the amount that I got?

I'm trying to reach IRS, but the phone has been busy when I've tried. I'm guessing that plenty of members here have encountered this question and gotten the official answer.

 

[AirForceShooter]

I'm assuming you took a loss on it.
If so, there's no reporting required

AFS

 

[peyton]

No, you do not have to report it, you paid taxes when you first bought it and then every year when you renewed the license plates.

 

[wheelgun28]

I am not an accountant

If you made money on it when you sold it the profit is taxable. So if you bought it for $5000 then sold it for $6000 you have a taxable $1000.

As is my understanding

I was told this happens very rarely...

 

[Texas Star]

I bought it years ago for about $15,000 roughly. I sold it for just a tenth of that figure, $1,500.

Still runs okay.

Thanks, guys. Sounds like we're of one opinion. I'm trying to live on a fixed income, and sure didn't want to find out that I owe taxes.

 

[s&wchad]

You expect a simple answer to a tax question?

First off, it's not income. I'll assume it was your personal property and not a depreciated business expense. If you sold it for less than you had into it (purchase price + documented repairs/maintenance costs), you have no tax liability and don't need to report anything. If you sold it for more than you had into it, you need to report it as capital gains and pay the tax on the profit (short term CG = held less than a year, long term CG = more than a year).

 

[25elk]

For what it's worth, this happened to me. Without going into all the frustrating and terrifying details, I was subjected to an IRS audit some years ago. After establishing the fact that I couldn't cooperate and make the twenty-mile trip downtown to the IRS office since they had frozen ALL my assets and bank accounts, the IRS agreed to come to my house.

Five days a week for four months an agent and I went over 10 years of my banking transactions. They had microfiche of every transaction. The questions were brutally simple. What was this deposit? I don't know, I would respond, that was 9 years ago. Every single deposit that I didn't have back-up documentation for was considered income. This entire time I had no income, couldn't write a check, and damn sure didn't deposit anything in the bank.

So, those who are telling you that the small amount you got doesn't count haven't been through an audit. The IRS will consider that vehicle fully depreciated and therefore your net is profit, which is income. BTW, if this ever happens to you get an EA immediately. The best money I ever spent.

 

[25elk]

As to reporting it, I wouldn't, but I would sure have enough back up to show that it wasn't ordinary income.

 

[Chromedhearts]

You can give a car to certain charities, and use it as a tax deduction. Some thing to consider if you have a car that is payed for and may not be able to sale quickly.

 

[Iggy]

Aw just put an extra hundred on your tax payment.. If they don't git you now they'll find a way to git you later..

 

[Marshwheeling]

The following is from the internet, so you know you can rely on it:

"In a nutshell, the Internal Revenue Service (IRS) views all personal vehicles as capital assets.

If you sell it for less than the original purchase price, it’s considered a capital loss. This means you do not have to report it on your tax return.

However, if you sell it for a profit (higher than the original purchase price), or what is called a capital gain, you must report the windfall on your income tax return and pay taxes on it.

Determining Capital Gain After Selling a Car

Deciding if you must report auto sales to the IRS is fairly easy:

Determine the original purchase price. If you don’t recall, check the Bill of Sale or purchase contract.
Subtract all taxes associated with the purchase. Depending on your state this may include sales tax, use tax, and/or wheel tax.
Add any vehicle improvement costs to the adjusted purchase price. This does not include regular maintenance costs, only improvements. An improvement is deemed as anything that’s long term, such as new paint or new stereo speakers.
Subtract what you sold the car for from the adjusted purchase price. So if you bought the car for $14,000 and sold it for $8,000, you would have a capitol loss of $6,000. You would not have to report this to the IRS. However, if you bought it for $14,000 and sold it for $15,000, earning a $1,000 capital gain, you would report this on your tax return, using Schedule D on Form 1040 that’s appropriately titled “Capital Gains and Losses.” The form will instruct on you needed information.
This system applies to all used cars that you sell. If have any questions, call the IRS."

Income Tax Implications of Selling a Used Car | DMV.org Articles

 

[gregintenn]

I bought it years ago for about $15,000 roughly. I sold it for just a tenth of that figure, $1,500.

Still runs okay.

Thanks, guys. Sounds like we're of one opinion. I'm trying to live on a fixed income, and sure didn't want to find out that I owe taxes.

Sounds like you should depreciate it.

 

[BCDWYO]

I was hoping this would be a question of selling firearms. Maybe its been covered here before, but when private collectors are selling firearms (sometimes or usually at a profit from what we paid for them), how does the IRS view that? I can tell you I've never reported it, but I wondered if maybe I'm supposed to?

 

[gregintenn]

I was hoping this would be a question of selling firearms. Maybe its been covered here before, but when private collectors are selling firearms (sometimes or usually at a profit from what we paid for them), how does the IRS view that? I can tell you I've never reported it, but I wondered if maybe I'm supposed to?

Sure. What you sold it for minus what you paid for it equals profit/income. Does anyone do it? Very few.

 

[Iggy]

I buy and sell guns the same way I do with cattle.. Buy high and sell low...

Din't plan it that way, but that's how it always happens.

 

[4barrel]

How do you get-naaaahh- I think I will tell my buddies to look at this post as most are car dealers. We need something to discuss at the coffee shop & this could possibility be the hottest thing on cheating the tax man. I hope they don't find out about the $ 20 dollars a month I charged my preacher for mowing his grass to pay for the gas.

 

[truckemup97]

I was hoping this would be a question of selling firearms. Maybe its been covered here before, but when private collectors are selling firearms (sometimes or usually at a profit from what we paid for them), how does the IRS view that? I can tell you I've never reported it, but I wondered if maybe I'm supposed to?

I was going to sell them for a profit, but then they all went to the bottom of the Gulf in that terrible boating accident.

 

[labworm]

I bought it years ago for about $15,000 roughly. I sold it for just a tenth of that figure, $1,500.

Still runs okay.

Thanks, guys. Sounds like we're of one opinion. I'm trying to live on a fixed income, and sure didn't want to find out that I owe taxes.

Star, don't worry if you owe, they will surely contact you.

 

[4barrel]

I bought it years ago for about $15,000 roughly. I sold it for just a tenth of that figure, $1,500.

Still runs okay.

Thanks, guys. Sounds like we're of one opinion. I'm trying to live on a fixed income, and sure didn't want to find out that I owe taxes.

Have you been a TEXAN all your life or imported? Don't worry-be happy. Not trying to offend but it aint worth loosing sleep over.

 

[4barrel]

I was hoping this would be a question of selling firearms. Maybe its been covered here before, but when private collectors are selling firearms (sometimes or usually at a profit from what we paid for them), how does the IRS view that? I can tell you I've never reported it, but I wondered if maybe I'm supposed to?

AT THE END OF YEAR WAKE UP- YOU are in the hole . The time you do shipping --There is no way you made a profit -The AMERICAN DOLLAR HAS CUT IN 1/2 IN THE LAST 4 YEARS.

 

[Old TexMex]

If you bought it for 15,000 and sold it ten years later for 1500... You made a huge profit, since the dollar is SO MUCH more valuable than it ever was ten yrs ago, so just write 'em a check, leave it blank(they'll fill it out) and sign it. They won't bug you at all. 'till next year.....

 

[bigolddave]

Don't EVER raise the question of paying tax on the sale of a gun on this forum! I foolishly did (idle curiousity of a retired accountant) and the responses were about evenly divided between those whose entire collection had been lost in a tragic boating accident, and those who were muttering about tar, feathers, and how many would they need to carry bigolddave on a rail!

 

[smokindog]

The State should have taken sales tax from your son when it was retitled. A relatively recent change bases that tax on fair market value, not actual sale. I don't get this paying sales tax multiple times on the same product but that's what we've allowed our rulers to do......

I bought it years ago for about $15,000 roughly. I sold it for just a tenth of that figure, $1,500.

Still runs okay.

Thanks, guys. Sounds like we're of one opinion. I'm trying to live on a fixed income, and sure didn't want to find out that I owe taxes.

 

[rimfired]

Them tragic Boating accidents bring a tear to my eye.

Don't EVER raise the question of paying tax on the sale of a gun on this forum! I foolishly did (idle curiousity of a retired accountant) and the responses were about evenly divided between those whose entire collection had been lost in a tragic boating accident, and those who were muttering about tar, feathers, and how many would they need to carry bigolddave on a rail!

 

[ladder13]

What happens if you sell an organ, is it a taxable event? How do you value it?

 

[bricker]

I got that new simplified tax form this year.
Line #1-How much did you make last year?
Line #2-Send it in.

 

[Texas Star]

Looks like it's time to close the thread. All of the useful, valid information has been posted.

 

[Mickey D]

Looks like it's time to close the thread. All of the useful, valid information has been posted.

Not your call, we aren't finished yet.