The IRS and selling personal cars???

[Zedder]

Being Canadian, I have no idea what the IRS has to do with selling personal cars, so maybe some of you can help me out. I have been trying to put a deal together on a super nice '67 Z-28. We agreed on a price yesterday and started talking about payment and the owner seemed really concerned about the IRS knowing how much he sold the car for??? What does the IRS have to do with selling a personal car? This guy is not in the business and has owned the car for years, so if he's making a profit, does the IRS really care? Thanks for any help you can provide. I like nice, simple car deals and this one is getting a little too complicated http://www.yenko.net/ubbthreads/images/graemlins/dunno.gif

[Belair62]

[ QUOTE ]
so if he's making a profit, does the IRS really care?

[/ QUOTE ] Profit is the key word there...I would like to see some knowledgeable info on this myself

[Don_Lightfoot]

Well Mark, I guess the bottom line is whether our Classic Cars are considered "Investments" like Stock Holdings, Art Collections and Rental Properties. If so, then they could possibly be subject to Capital Gains Tax. My personal opinion, considering most of us are not dealers, this should not come into play. A lot of enthusiasts I know buy and register these cars through their own business which is a totally different cup of tea. Would be interesting to really know how our own Canada Customs and Revenue approach this. However, I'm certainly not going to call them to find out http://www.yenko.net/ubbthreads/images/graemlins/no.gif

[Jeff H]

I don't know why it should matter to the seller. But going across the border there are some fees involved and that could be an issue. It could also have something to do with Capital Gains, but if he's had the car for a long time then that doesn't come into play.

[MGINLA]

Hopefully this will help. US Supreme Court term of "income" has approved this definition: "Income may be defined as the gain derived from capital, from labor, or both combined, provided it be understood to include profit gained through a sale or conversion of capital assets." In addition, the Supreme Court has repeatedly held that Congress's broad definition of what constitutes gross income was intended to tax all gain unless specifically exempted. As the sale of classic automobile is not specifically exempted, the gain should be taxable. As will all information on the net you should see your Tax Professional. And no, I do not work for the IRS.

[Jeff H]

Hmmm. The problem I have with a definition like that is if I invest $80K into a restoration of my hard earned money that has already been taxed, then I need to sell the car for some unexpected reason and manage to sell it for the amount I paid plus the restoration, I should not have to pay tax on the money I received for the car since it was already taxed. I did not make a profit on the car so therefore no Capital Gains.

[MGINLA]

Jeff, you will not be taxed on the full amount only the profit portion. The profit is over and above your cost in the vehicle. You cannot include a cost for your labor if you do the restoration yourself. You also can avoid the tax if you do a 1031 exchange for another car or cars.

[SamLBInj]

[ QUOTE ]
Being Canadian, I have no idea what the IRS has to do with selling personal cars, so maybe some of you can help me out. I have been trying to put a deal together on a super nice '67 Z-28. We agreed on a price yesterday and started talking about payment and the owner seemed really concerned about the IRS knowing how much he sold the car for??? What does the IRS have to do with selling a personal car? This guy is not in the business and has owned the car for years, so if he's making a profit, does the IRS really care? Thanks for any help you can provide. I like nice, simple car deals and this one is getting a little too complicated http://www.yenko.net/ubbthreads/images/graemlins/dunno.gif

[/ QUOTE ]
I would guess this is one of those double bill of sale deals, One for the actual amount you are paying, probably 35K+ and one for the IRS for $3,000.00 (the title just shows an old 67 camaro)..Remember this though, the IRS is not stupid, some of those agents do collect cars and they know what they are worth. I think Kevin Suydams ZL-1 Vette was originally owned by an IRS agent...Sounds like the guy has had some tax problems or maybe even a child support thing or attached wages...otherwise the full sale with the tax really wont amount to much..the guy should talk to an accountant, he will learn alot...being sneaky always catches up with you...I wonder if the IRS monitors these boards...Ill bet they do..1 to 2 hundred thousand dollar cars changing hands and being discussed here all the time...Big Brother is watching. They always have been and they always will be... http://www.yenko.net/ubbthreads/images/graemlins/eek.gif JMHO
Sam

[Zedder]

Nope...bills of sale haven't even been discussed yet - we never got that far. In fact, this is the second time in recent months were the seller has wanted to be paid all or most of the amount in cash because of the "IRS". Obviously, this is difficult to do long distance, so it causes me a problem. Personally, I really don't think the profit generated by the car would be of much consequence to either the owner or the IRS, so I really don't understand the concern.

Sam, when you find a nice '67 Z for $35,000 please let me know - I'll take two! http://www.yenko.net/ubbthreads/images/graemlins/biggthumpup.gif

[MotownMadman]

One angle that will work well in this type of situation is a person is allowed to claim $17,000 per year tax free on a hobby, which can be whatever you claim it to be. It has been a few years since I researched this subject, so the amount could have gone up, down, or the law done away with completely. Worth checking into though.
Motown http://www.yenko.net/ubbthreads/images/graemlins/beers.gif

[rafbody]

Hey Mark,
I asked a friend who works for the IRS about having to pay capital gaines on selling a car and here is what she sent me.
Yes, he would have to recognize the gain on the sale using Schedule D of Form 1040. The original cost of the car plus the cost of any repairs or improvements made by the guy would be the basis of the car and the gain recognized would be the sales price minus this basis. If the guy intends to add repairs and improvements to the basis of the car I suggest he have proof of the cost of those improvements.

[SamLBInj]

[ QUOTE ]
Nope...bills of sale haven't even been discussed yet - we never got that far. In fact, this is the second time in recent months were the seller has wanted to be paid all or most of the amount in cash because of the "IRS". Obviously, this is difficult to do long distance, so it causes me a problem. Personally, I really don't think the profit generated by the car would be of much consequence to either the owner or the IRS, so I really don't understand the concern.

Sam, when you find a nice '67 Z for $35,000 please let me know - I'll take two! http://www.yenko.net/ubbthreads/images/graemlins/biggthumpup.gif

[/ QUOTE ]
I was guessing that you were dealing with that guy that wants to swap a 69 Z/28 for the 67 Z/28...I didnt want to type in what the car should sell for in case the other guy did not know and was reading this, but you basically just told him his car is worth 75K. http://www.yenko.net/ubbthreads/images/graemlins/eek.gif..I always have a cryptic message in all my posts, and you have to read between the lines. By doing this I'm slowly brainwashing everyone into selling me their Yenko camaros for 5 grand http://www.yenko.net/ubbthreads/images/graemlins/naughty.gif
Sam

[MotownMadman]

The IRS is very much aware of the value of collector cars and has been for quite some time. A few years back I took a 66 BB Vette to Bloomington for judging, that show has a car coral of a great number of upper end Corvettes for sale, I was in disbelief when I noticed that the IRS had a booth set up right on the premises to record all Corvette sales as far as who was selling, buying, and the amount of money involved in each transaction. Income tax can be a repetative situation, my parents owned and operated a upper scale antique business for years, when dealing with previously owned items the tax man can benefit repeatedly. One piece of antique furniture can be resold dozens of times to different owners, each time taxes must be paid if there is a profit over investment.The same is true with cars, Money Made, Money Paid. Previously owned items should not be taxed repeatedly, even worse on the high end the seller has to pay tax on income, the buyer has to pay a luxury tax. They get you coming and going. American Beauracracy at it's finest. However, things could be worse, Garnet M20, how is the tax structure in England?
Motown http://www.yenko.net/ubbthreads/images/graemlins/tongue.gif

[MGINLA]

In the United States all gains from Hobbies are taxable. The losses from hobbies are not deductible. There is no longer a $17,500 limit. On another note in California you are charged Sales Tax on the full purchase price reguardless if it is a used car. "Born free taxed to death" http://www.yenko.net/ubbthreads/images/graemlins/flag.gif Mark the reason they want cash is because it is harder to trace. By the way did you get the Corvette you are looking for?

[Zedder]

Sam,

Stop talking in code that I don't understand http://www.yenko.net/ubbthreads/images/graemlins/haha.gif No, it's not that car. In fact, I sent that guy an email and never got a response from him??? Did you? As for $75K - I said I'd buy 2 for $35K each, but I doubt I'd spend $75K for one unless is was truly phenomenal. To the best of my knowledge, the most one has actually sold for has been about $60K. However, there have been a number offered for more than that. Coincidentally, a guy contacted me yesterday that has a nice Blue RS Z that he is interested in selling. When I asked how much, he said he had no idea what they are worth and asked my opinion. I hear this same comment over and over again regarding these cars. I guess not enough of them change hands for people to get a feeling for the market.

M: Been hot for two Corvettes recently so I'm not sure which you are referring to. One turned out to have a problem with the paperwork and the other sold while I was trying to get someone to inspect it for me. No big deal, I am willing to wait for the right car.

Matt: Want to talk about taxes? I pay 15% of the declared value for any car that I bring into Canada! http://www.yenko.net/ubbthreads/images/graemlins/bs.gif

[Zedder]

Thanks Russ...I appreciate you checking that out for me. BTW, did that fellow ever contact you?

[Jeff H]

I wouldn't have a problem paying tax on a profit since it's basically the same as income.

[SamLBInj]

[ QUOTE ]
I wouldn't have a problem paying tax on a profit since it's basically the same as income.

[/ QUOTE ]
You would if you got bumped into the top bracket http://www.yenko.net/ubbthreads/images/graemlins/no.gif
Let say you are married and making 50K a year, You sell that 500 original mile 69 ZL-1 camaro you bought back in 1972 for 3 grand for 700k and make a 697K profit...Then tax becomes substantial and the tax man comes licking his chops http://www.yenko.net/ubbthreads/images/graemlins/tongue.gif You could buy a Yenko for what you would be paying in taxes http://www.yenko.net/ubbthreads/images/graemlins/eek.gif Now on the other hand, you could be sneaky and have a second bill of sale for $3,500.00 http://www.yenko.net/ubbthreads/images/graemlins/naughty.gif but if you get caught you will be best friends with some guy named Bubba and playing house in his little 6x8 room http://www.yenko.net/ubbthreads/images/graemlins/no.gif
I say Legalize drugs, control them, opens lots of rehabs and tax the ship out of it like tobacco and well never have to pay income tax again http://www.yenko.net/ubbthreads/images/graemlins/cool.gif Be sorta like reliving the 60's all over again http://www.yenko.net/ubbthreads/images/graemlins/cool.gif
Sam

[NEW]

TAXES in Norway!.

On all cars older than 30 years we pay 24 % tax on the invoice value, in addition there is a one time only tax for all cars coming in to the country regardless of age, on abt. 1000 US$.

On cars as new as for example the Hot Rod Camaro i bought last year, sticker price abt. 45K, add. 24%, plus if i want to have plates for registration, add 70KUS$, and this is true!!!

A new C5 Corvette is costing just about 185 K US$,

I have dealer plates, so i do not put registration plates on my cars, this lets me pay only 24% on the invoice value..

Our IRS is way harder on us, than yours!!


NEW

[SamLBInj]

[ QUOTE ]
TAXES in Norway!.

On all cars older than 30 years we pay 24 % tax on the invoice value, in addition there is a one time only tax for all cars coming in to the country regardless of age, on abt. 1000 US$.

On cars as new as for example the Hot Rod Camaro i bought last year, sticker price abt. 45K, add. 24%, plus if i want to have plates for registration, add 70KUS$, and this is true!!!

A new C5 Corvette is costing just about 185 K US$,

I have dealer plates, so i do not put registration plates on my cars, this lets me pay only 24% on the invoice value..

Our IRS is way harder on us, than yours!!


NEW

[/ QUOTE ]
What do you mean "add 70K for Plates"? Holy Snikees!
Damn, thats down right theft...How much does a Volvo cost you?
Sam

[NEW]

What do you mean "add 70K for Plates"? Holy Snikees!

What i mean, is that if i would like this car to have real license plates, and be able to use it daily as transportation, just as all the Volvos and Mercedes here, i would have had to pay another 470000 of my kind of money, and that would be abt. 70000 US$,

The IRS know what they want, and how to get it!

NEW

[SamLBInj]

[ QUOTE ]
What do you mean "add 70K for Plates"? Holy Snikees!

What i mean, is that if i would like this car to have real license plates, and be able to use it daily as transportation, just as all the Volvos and Mercedes here, i would have had to pay another 470000 of my kind of money, and that would be abt. 70000 US$,

The IRS know what they want, and how to get it!

NEW

[/ QUOTE ]
Ok, I just got a new Mercedes SL600 and it cost me 140K, How much would that same car cost you to be able to drive down the road for a gallon of milk?
Sam

[Belair62]

Capital gains tax is higher on short term gains...long term goes down in percentage...

[SamLBInj]

[ QUOTE ]
Capital gains tax is higher on short term gains...long term goes down in percentage...

[/ QUOTE ]
Tell me about it, Man did I get whacked for some day trading a few years back http://www.yenko.net/ubbthreads/images/graemlins/no.gif...Now my motto is "Long Term"
Sam

[rafbody]

No Mark. I have never heard from the guy.

[MotownMadman]

MGINLA, Well, it has been so long since I had a hobby that made money I guess I am a bit out of touch.......
Motown http://www.yenko.net/ubbthreads/images/graemlins/beers.gif

[MGINLA]

Motown, That is a good story and you stick to it. http://www.yenko.net/ubbthreads/images/graemlins/naughty.gif I myself purchased an overpriced car from a Hollywood Actor so I will not have a gain when I sell it. http://www.yenko.net/ubbthreads/images/graemlins/haha.gif

http://www.yenko.net/ubbthreads/images/graemlins/beers.gif

[NEW]

Ok, I just got a new Mercedes SL600 and it cost me 140K, How much would that same car cost you to be able to drive down the road for a gallon of milk?
Sam


An SL600, an guesstimate is around 320000 US $...

Average salary here is 40 - 45 K US, minus what the IRS wants, that normally is around 33 - 42 % on regular wages.

NEW

[SamLBInj]

[ QUOTE ]
Ok, I just got a new Mercedes SL600 and it cost me 140K, How much would that same car cost you to be able to drive down the road for a gallon of milk?
Sam


An SL600, an guesstimate is around 320000 US $...

Average salary here is 40 - 45 K US, minus what the IRS wants, that normally is around 33 - 42 % on regular wages.

NEW

[/ QUOTE ]
Wow http://www.yenko.net/ubbthreads/images/graemlins/eek.gif so it has nothing to do with a car coming from America, just about how your government does business...what free services do you get, like medical, transportation, ect..I use the term "free" loosely..
Makes me proud to be an American, your making our IRS look good! http://www.yenko.net/ubbthreads/images/graemlins/flag.gif http://www.yenko.net/ubbthreads/images/graemlins/flag.gif http://www.yenko.net/ubbthreads/images/graemlins/flag.gif http://www.yenko.net/ubbthreads/images/graemlins/flag.gif
Sam