So as I understand it and I am not an accountant, but there would be the potential of paying tax on the ‘gain’.
However, between the original purchase price, the cost of items purchased and the cost of work put into it (did you save receipts?), and a cost for your time for any work done (what might your hourly rate be? $50 or $75/ hr?), the likelihood of you actually making a gain is unlikely unless you are selling a very high dollar hemi car and bought it cheap.
You were doing pretty good until you decided you could pay yourself for your time, before that everything was legitimate (if you have the paperwork to back everything up). Paying yourself means you were in business, and that changes everything, that money you paid yourself was taxable income, and the IRS will want to know how much money you made working for other people. If you claim the other stuff, you better have receipts for every penny you claim as part of the cost to get the car into the condition the value represents.
Tread carefully. If the car was an "investment" you may be required to prove it was an investment and not something used for pleasure. A true investment can have a lot of things that can be charged against the selling price, and the profit may fall under a capital gain tax, which could be lower then what a pure income derived from selling a personal use item for a large profit.
If you get a large amount of cash, then run down and put it in the bank (or put a smaller amount in the bank every month for 8 months), the IRS may be very interested in what you are doing. A couple of grand in a year may, or may not have a huge impact on the taxes you owe, but 20 grand will have a huge impact on the taxes you owe.
You either take your chances, or contact your tax people and see where you really stand. A good tax person would have better advice the some Mopar board will have.
