A couple years ago when I thought I had one of my cars about to sell, I asked my accountant and he said profit if the car was owned over a year is capital gains.
What wasn’t clear is how many expenses related to the car could be included along with the purchase price as a “basis”.
Parts are pretty much a given. Advertising and other related costs incurred to sell it are too. But if you have the car stored, can the storage fees be included in the basis?
How about title and sales taxes paid when car was purchased?
The big collectors have this all down to a science I’ve heard buying and selling while maximizing any tax strategy available to their advantage. Helps to be able to afford the best tax attorneys and accountants!
The rest of us who maybe only sell a car at a profit once in a lifetime or a few times over the years end up doing a lot of guesswork.
Or just accept cash only and in the hectic pace of life, accidentally forget the sale even happened by the time tax preparation season arrives.