Re: "Income" from car sale taxed ?
[Re: hemienvy]
#2997076
12/20/21 03:50 PM
12/20/21 03:50 PM
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Joined: Jan 2003
Posts: 10,758 North Dakota
6PakBee
I Live Here
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I Live Here
Joined: Jan 2003
Posts: 10,758
North Dakota
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For me,
1) cash is king 2) IIRC you are supposed to pay tax on anything in excess of the purchase price and work done to the vehicle
"We live in a time when intelligent people are being silenced so that stupid people won't be offended".
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Re: "Income" from car sale taxed ?
[Re: Stanton]
#2997100
12/20/21 05:36 PM
12/20/21 05:36 PM
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Joined: Nov 2003
Posts: 10,228 Colleyville
3hundred
I Live Here
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I Live Here
Joined: Nov 2003
Posts: 10,228
Colleyville
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Lately I've been reading a lot of how the IRS is targetting individuals who deposit numerous sums under 10k. They seize the bank account and its up to the individual to prove they weren't trying to avoid taxes. They're pulling Civil Asset Forfeiture on individuals legally earned income if they determine the deposits are "structured" in such a way to avoid the $10,000 reporting threshold. It's a catch 22 type thing, akin to driving 54 MPH in a 55 MPH zone in order to avoid a ticket. They did it in 2013 to a man (Andrew Clyde) who is now a Georgia congressman to the tune of ~ $1,000,000.00. When he pushed the issue the IRS offered him 2/3 of his money back if he'd agree to paying 1/3 as a "penalty". You can't make this sh*t up Expect more of this as the deficit increases. 2¢
'68 Fury Convertible '69 300 Convertible '15 Durango 5.7 Hemi '16 300 S Hemi
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Re: "Income" from car sale taxed ?
[Re: Stanton]
#2997101
12/20/21 05:36 PM
12/20/21 05:36 PM
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Joined: May 2012
Posts: 1,849 South Bend
John Brown
top fuel
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top fuel
Joined: May 2012
Posts: 1,849
South Bend
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No bank needed. A full tank of gas and some groceries oughta be a good start in getting rid of that wad.
Save whatever's left for a rainy day.
July 19th should be "Drive Like Rockford Day". R.I.P. Jimmie.
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Re: "Income" from car sale taxed ?
[Re: hemienvy]
#2997135
12/20/21 08:36 PM
12/20/21 08:36 PM
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Joined: Jan 2003
Posts: 31,076 Oregon
AndyF
I Win
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I Win
Joined: Jan 2003
Posts: 31,076
Oregon
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If you sell your car and the price is high, two questions:
1. How would YOU accept payment ?
2. Are you then supposedly required to declare that as income ? ( Of course, I am interested in avoiding being taxed ) It depends. A high dollar car might be deemed to be a collector item and subject to the special 28% tax rate. I'm a little unclear on the rules around that so if you have a big buck car you should talk to a CPA. Most used cars sell for less than their purchase price so nobody pays any attention to that stuff. If you have a hobby car that sells for more money than you have in it then you should declare the income but it really depends on how good your paperwork is. If the car is an asset in a business then you have a different set of rules to follow. I sold my Duster this year so I'll need to declare that as income for my business but I wrote off all of the build expenses so it all kind of evens out in the long run.
Last edited by AndyF; 12/20/21 10:51 PM.
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Re: "Income" from car sale taxed ?
[Re: RP's R/T's]
#2997154
12/20/21 09:27 PM
12/20/21 09:27 PM
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Joined: Feb 2015
Posts: 2,081 CA
crackedback
top fuel
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top fuel
Joined: Feb 2015
Posts: 2,081
CA
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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, YES the cost of items purchased and the cost of work put into it (did you save receipts?), YES and a cost for your time for any work done (what might your hourly rate be? $50 or $75/ hr?), NOPE, absolutely NOT
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 don't get to claim your time/rate on the work YOU do to your personal car.
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Re: "Income" from car sale taxed ?
[Re: Mastershake340]
#2997163
12/20/21 09:50 PM
12/20/21 09:50 PM
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Joined: Aug 2019
Posts: 9,572 Super Spudsville
Mr PotatoHead
Half Baked
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Half Baked
Joined: Aug 2019
Posts: 9,572
Super Spudsville
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Only had it happen one time but I always thought if you underpaid or missed something the IRS will send you a letter for payment. So for me I do as little as possible and since im in good standing with the IRS I dont change up and if and when I get a letter saying I owe them money like the one time they did I will pay it. I dont worry about a full audit as I dont think it would be in there favor.
STOP POTATO HATE!
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Re: "Income" from car sale taxed ?
[Re: RP's R/T's]
#2997164
12/20/21 09:50 PM
12/20/21 09:50 PM
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Joined: Jan 2003
Posts: 10,641 Freeport IL USA
poorboy
I Live Here
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I Live Here
Joined: Jan 2003
Posts: 10,641
Freeport IL USA
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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.
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Re: "Income" from car sale taxed ?
[Re: poorboy]
#2997191
12/20/21 10:55 PM
12/20/21 10:55 PM
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Joined: Jan 2003
Posts: 31,076 Oregon
AndyF
I Win
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I Win
Joined: Jan 2003
Posts: 31,076
Oregon
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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. A good tax person would have better advice the some Mopar board will have. You are forgetting that there are some good accountants and tax people on Moparts.
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Re: "Income" from car sale taxed ?
[Re: crackedback]
#2997200
12/20/21 11:11 PM
12/20/21 11:11 PM
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Joined: Jan 2003
Posts: 18,427 UPPER MICHIGAN, MARQUETTE COUN...
NITROUSN
I Live Here
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I Live Here
Joined: Jan 2003
Posts: 18,427
UPPER MICHIGAN, MARQUETTE COUN...
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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, YES the cost of items purchased and the cost of work put into it (did you save receipts?), YES and a cost for your time for any work done (what might your hourly rate be? $50 or $75/ hr?), NOPE, absolutely NOT
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 don't get to claim your time/rate on the work YOU do to your personal car. That is exactly right. Your own labor means nothing. Not that there is not away around it. The IRS is looking at labor as a taxable point. Sublet labor should be though a licensed shop. If not they use that to tax you. So if not taxable income your hours equal 0. Keep every receipt and I mean everything.
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Re: "Income" from car sale taxed ?
[Re: NITROUSN]
#2997245
12/21/21 10:12 AM
12/21/21 10:12 AM
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Joined: Oct 2005
Posts: 8,911 Ontario, Canada
Stanton
Don't question me!
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Don't question me!
Joined: Oct 2005
Posts: 8,911
Ontario, Canada
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I Canada only 50% of capital gains are taxable. !00% of income is taxable. So applying this to this situation, you're wiser to claim the taxable gain - not "pay yourself for labor". Also in Canada the revenuers don't seem to be terribly concerned about someone making a few bucks on a car deal, they charge sales tax at the time of ownership transfer and it pretty much ends there on private deals.
Last edited by Stanton; 12/21/21 10:15 AM.
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Re: "Income" from car sale taxed ?
[Re: hemienvy]
#2997290
12/21/21 01:28 PM
12/21/21 01:28 PM
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Joined: Jan 2003
Posts: 4,760 Moved to N.E. Tennessee
GomangoCuda
master
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master
Joined: Jan 2003
Posts: 4,760
Moved to N.E. Tennessee
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One thing I don't get. Let's say I bought a car 50 years ago for $3000 and sell it today for $30,000. That's not profit, that's inflation. Gasoline and many other things costs at least 10 times what they cost 50 years ago. Why should I have to pay income tax on inflation? The new owner of the mythical car above is already paying state sales tax on it and now they want me to pay income tax on the inflation as well.
In theory, there is no difference between theory and practice. In practice, there is.
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