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 )

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

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¢

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.

Imagine you're a smallish business and your weekly deposits are around $9k per. A couple years go by and the IRS swoops in and seizes all your assets claiming your deposits were "structured" in such a way to avoid the $10,000 reporting threshold. You provide all the information showing you reported all income and paid all taxes. They don't give a sh!t.

This happened !!

There are lawyers taking these cases on Pro Bono because its such a scam.

If you are the 1% or 2% of people making a profit on a car sale, consider yourself fortunate.

If someone gives you cash for an expensive car, what happens when they sell it? What is their basis that they will be taxed on?

Best way for selling party, on death. The selling party gets the step up basis if the estate is under a certain amount.

Hire a CPA. Pay what you owe. Pretty simple.

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.

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.

WHERE are the peeps proclaiming... torches and pitchforks OR tar and feather these rascals ?

The swamp is feathering their beds with our $$$

How much of this overreach are you going to tolerate ?

You don't get to claim your time/rate on the work YOU do to your personal car.

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.

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.

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.

That’s all good and fine about tax professionals, but I’ve found you’ll get different answers from different CPAs. Some are much more conservative than others when telling you what their interpretation of what you can deduct is. Some are way to conservative, some seem pretty fast and loose.
Some of it boils down to how much money we are talking about. They don’t have the resources to chase small change almost always.. Some ex wife might call them to report her ex is bragging about making $5000 selling a car and is sure he didn’t report it, and they’ll basically tell her to go away. They catch word some high earner made 100 grand selling a car and didn’t report the profit, and they’ll throw a bunch of resources at going after the guy.

You are forgetting that there are some good accountants and tax people on Moparts.

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.

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.

If you paid to have the labor done and have receipts you can include it in the cost of car. If you had a car you bought for $50K and added $20K in improvements not counting your personal labor your cost basis would be $70K and no income tax would be owed unless you sold it for over $70K and only on the amount over $70K. Just don't play games trying to put the money in an account a little at at time. That's a red flag! Just put the full amount in and they won't think you're doing anything wrong.

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.