Transfer of Large Amounts of Funds?

[markjohnson]

I've been shopping around for the right early musclecar lately and have the means to drop some serious cash on the right car. Maybe I'm finally starting to feel old, but I'm beginning to grow a little tired of the long hours at work, coming home and crawling under a project car that's going to consume every weekend for who knows how many years. My time has become too valuble lately.I want something finished and reliable. Anyway, my question concerns the large financial transactions for these old cars. How are these accomplished? Treasurer's or cashier's checks, electronic transfers or the old fashioned suitcase full of money? What about sales tax. Are people really paying sales full sales tax on $200,000 1969 Camaros. A friend recently sold his racecar for $30,000 and when he took the cash to his bank for deposit, the bank told him no way. They wanted to know where the money came from and gave him a form to send to the purchaser of his car inquiring about the money. I know anything over $10,000 withdrawn/deposited gets reported to the Feds, and my funds are acquired by honest means, but I'm just a little paranoid about my bank and the goverment knowing what I'm spending on old cars. I really believe it's private between the seller and purchaser and nobody else's business. Let me throw this out there also: are sellers of these cars paying capital gains taxes on these insane profits of lately? I don't think so. Any advice would be appreciated. Thanks.

[Verne_Frantz]

Mark,
My experience went like this: I bought an old car for a fairly large sum of money and the seller wanted cash. I simply called my bank and "ordered" the cash. I wrote a check for cash from my own account, went to the bank on the agreed day and picked it up. They filled out a simple form and just asked what it was for. I told them I was buying an old car and that was that. I don't think the Feds are tracking whether you are paying your local motor vehicle sales tax. They're looking for exchanges of large amounts of money for illegal purposes.
I had the seller sign 2 separate bills of sale; one for the real amount and one for a very small amount to be used at dmv when I take title.
That was my experience.

I've heard how some people open several different bank accounts and have modest deposits in each, then withdraw all the money when they need a large sum, but I'd think that would only cast suspicion of some wrong-doing with the Feds. They'd be able to trace each account very easily, and having that variety would only look like you're up to something.

Verne

[Chevy454]

Also, someone told me they dropped the *report* limit from $10k to $5k recently...any truth to that?

[Bill Pritchard]

Wire transfers are safe and fast...the way to go, in my opinion.

[ORIGLS6]

[ QUOTE ]
Also, someone told me they dropped the *report* limit from $10k to $5k recently...any truth to that?

[/ QUOTE ]

Define 'recently'. The $10k limit was still in effect in February.

[47Hammer]

I agree, I have made quite a few large purchases (for me) over the past 10 years or so and the wire transfer costs me $20 and it's done. http://www.yenko.net/ubbthreads/images/graemlins/flag.gif

[Mr70]

I read that any deposits made into a Bank account of 5K or more are quitely reported to the Federal Government with in seconds.This just became affective a few days ago.
They are looking for possible terrosit activity they say is why.Don't even think about buying 100 cell phones,(Triggers),all at once either..

[lzdick]

The $5K limit is obviously new and may change my plans.

In the past, I have written checks (up to $9,900) to friends to deposit in their accounts and get me the cash. This has always worked for me with no repercussions. Deposits can be done in reverse, giving a friend the cash and having them write you a check. Make sure you can trust this "friend". Most everything I do is cash. Did one wire transfer due to time constraints and deal went off without a hitch...and I haven't heard from the Feds (yet).
Rich

[budnate]

Good old Folgers can buried in the back yard...that's what pappy said was best.. http://www.yenko.net/ubbthreads/images/graemlins/scholar.gif no stinken bank to hassle you was his motto..may be some wisdom to it http://www.yenko.net/ubbthreads/images/graemlins/dunno.gif

[Zedder]

I think times are changing and large deposits/withdrawls are attracting a lot of attention. Tax evasion is a serious charge (at least it is up here in Canada) and getting caught at the border can get your car confiscated and not returned! I wire transfer funds and pay full tax when I register the car, it's just not worth it for me to take a chance for a few thousand dollars. And yes, I also claimed the profits that I made last year on my tax return - again, it's not worth taking the chance. If you ever get audited, and it's just a matter of time if you make a decent living, how are you going to explain that 6 figure deposit make to your bank account??? Car profits are taxed at capital gains rates minus expenses etc. so it really isn't that bad if you keep good records. Cash used to be the way to go, but we weren't talking about 6 figure cars back then http://www.yenko.net/ubbthreads/images/graemlins/beers.gif

[kwhizz]

I would just send my Wifes purse UPS Next Day Air....Tell the seller to take out what we agreed upon and send back the rest http://www.yenko.net/ubbthreads/images/graemlins/biggthumpup.gif......... Sometimes she doesn't know it was gone..........LOL

Ken http://www.yenko.net/ubbthreads/images/graemlins/flag.gif

[Xplantdad]

[ QUOTE ]
I would just send my Wifes purse UPS Next Day Air....Tell the seller to take out what we agreed upon and send back the rest http://www.yenko.net/ubbthreads/images/graemlins/biggthumpup.gif......... Sometimes she doesn't know it was gone..........LOL

Ken http://www.yenko.net/ubbthreads/images/graemlins/flag.gif

[/ QUOTE ]


http://www.yenko.net/ubbthreads/images/graemlins/eek.gif http://www.yenko.net/ubbthreads/images/graemlins/eek.gif http://www.yenko.net/ubbthreads/images/graemlins/eek.gif http://www.yenko.net/ubbthreads/images/graemlins/grin.gif

So that explains that black purse that was sent to me..I didn't know what you were implying http://www.yenko.net/ubbthreads/images/graemlins/grin.gif

[kwhizz]

[ QUOTE ]
[ QUOTE ]
I would just send my Wifes purse UPS Next Day Air....Tell the seller to take out what we agreed upon and send back the rest http://www.yenko.net/ubbthreads/images/graemlins/biggthumpup.gif......... Sometimes she doesn't know it was gone..........LOL

Ken http://www.yenko.net/ubbthreads/images/graemlins/flag.gif

[/ QUOTE ]


http://www.yenko.net/ubbthreads/images/graemlins/eek.gif http://www.yenko.net/ubbthreads/images/graemlins/eek.gif http://www.yenko.net/ubbthreads/images/graemlins/eek.gif http://www.yenko.net/ubbthreads/images/graemlins/grin.gif

So that explains that black purse that was sent to me..I didn't know what you were implying http://www.yenko.net/ubbthreads/images/graemlins/grin.gif

[/ QUOTE ]


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

Ken http://www.yenko.net/ubbthreads/images/graemlins/flag.gif

[ORIGLS6]

http://www.yenko.net/ubbthreads/images/graemlins/blush.gif Does she have any sisters?

Not that I'm looking or anything, but .................................................. .................................................. .................................................. ......................................... Does she? http://www.yenko.net/ubbthreads/images/graemlins/naughty.gif http://www.yenko.net/ubbthreads/images/graemlins/naughty.gif http://www.yenko.net/ubbthreads/images/graemlins/wink.gif

[Xplantdad]

Hey...I'd bring it back to reunion...but they might look at me *funny* going through the security area http://www.yenko.net/ubbthreads/images/graemlins/grin.gif http://www.yenko.net/ubbthreads/images/graemlins/beers.gif

See you guys in 13 days...not that I'm counting or anything. http://www.yenko.net/ubbthreads/images/graemlins/no.gif

[SuperNovaSS]

The bank told me the amount they report fluxuates on a weekly basis. Just because you don't have to fill out a form does not mean they are not reporting your account fluxuations.


Jason

[chads454Ls6]

[ QUOTE ]
I think times are changing and large deposits/withdrawls are attracting a lot of attention. Tax evasion is a serious charge (at least it is up here in Canada) and getting caught at the border can get your car confiscated and not returned! I wire transfer funds and pay full tax when I register the car, it's just not worth it for me to take a chance for a few thousand dollars. And yes, I also claimed the profits that I made last year on my tax return - again, it's not worth taking the chance. If you ever get audited, and it's just a matter of time if you make a decent living, how are you going to explain that 6 figure deposit make to your bank account??? Car profits are taxed at capital gains rates minus expenses etc. so it really isn't that bad if you keep good records. Cash used to be the way to go, but we weren't talking about 6 figure cars back then http://www.yenko.net/ubbthreads/images/graemlins/beers.gif

[/ QUOTE ]
I agree. Eventualy,The state and federal government will be linked together,so that when you transfer a title and say you paid $5000.00 for a car,and really paid $50.000.00 for a car,and then you sell the car for say $75.000.00,and do not claim the difference,you will be in serious trouble! Luckily in Minnesota,if you put collector plates on a car when you transfer the title,it is a flat 90 dollar fee instead of 7% of the sale of the car so that makes it a little easier to deal with. As a prominent member of this board who went through an audit once told me,always Make sure your paperwork is covered in all your transactions you do. Meaning,if you get audited you better be able to explain a 50k deposit or a wire transfer 3 years ago!

[JChlupsa]

Never have had any problems, the "C" note i send now and then to my sis for powerball tickets is only tracked by www.wheresgeorge.com (http://www.wheresgeorge.com)

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

[firstgenaddict]

If you restore the car yourself do you have to claim the difference between buy and sell price as capital gains (minus expenses) What about your own labor can you only deduct it if you own a restoration shop?

Just wondering about tax implications of all this money floating around...

[Keith Tedford]

I bought our COPO Chevelle new. I guess I will just restore the car and drive it. I'll be damned if I will do all the work of restoring the car then give half the profit to the government. Capital gains tax up here is about 50 percent and they didn't lift a finger. I'm the one with the dirt in the eye, sweat, cuts and gouges. Makes the choice easy. http://www.yenko.net/ubbthreads/images/graemlins/smile.gif

[Zedder]

Actually Keith, Capital gains tax is 50% of your income tax rate for a maximum of 23% if you are making 6 figures.

[Keith Tedford]

I guess that I didn't understand the information that I got. With retirement coming up the income will take a drop into safer territory. Not going to give them 23% either. Don't be surprised to see one COPO Chevelle on the roads....If I can ever get it done. Guess I'm going to be Like Albert Galdi and do it myself. http://www.yenko.net/ubbthreads/images/graemlins/smile.gif

[427king]

If the car is owned for 1 year or more it is considered a long term cap gain and is subject to 2o% cap gain tax,also our state adds 5% cut,for a total of 25%. If the car is owned for less than 1 year it is considered a short term cap gain and then the income realized is not a cap gain, but rather considered regular income which can be taxed at 43% here in CT[38% highest bracket plus 5% state]. In a perfect world you should sell a short term gain in a year where you have no other income to take advantage of the lower tax brackets, i havent done the math but it would save you 5 figures in taxes in any given year if you profit by 75K for example.[Not that youd want to quit your job to save that]. Another thing is if you own the car for 10 months for example,wait the extra time for sure and save up to 18% in taxes by holding it for the year.Lastly it is a big advantage to sell a car in the beggining of the year rather than the last few months of the year.If you sell a car in Jan 2007 for example the taxes arent due until April 2009. And you have 16 months to use that tax money to invest in a cd or something. if you sell in Dec 2006,you owe the tax in 5 months instead of 16 months in the previous example just by holding out on selling by a few days or weeks

[Zedder]

I hope to see it Keith! I was just talking with a friend about the fact that you hardly ever see anything really rare at the cruise nights anymore...I can't wait until the Z is done as we are going to DRIVE that car http://www.yenko.net/ubbthreads/images/graemlins/3gears.gif

[Keith Tedford]

Zedder, with any kind of luck we will get together with our cars some day. We cruised for some distance along the QEW in our L78 Chevelle with Scott Gay and his COPO Chevelle a few years ago. Kind of neat. We were coming home from the Waterdown show. There seem to be more people racing their cars at the SCR as well. We put close to 200K miles on the COPO car the first time around, about 30K on our L78 car since '98 and about 10K on our '72 455 Lemans. Wouldn't have it any other way. I don't think that we will be worrying about transferring large amounts of funds any time soon. http://www.yenko.net/ubbthreads/images/graemlins/wink.gif http://www.yenko.net/ubbthreads/images/graemlins/3gears.gif http://www.yenko.net/ubbthreads/images/graemlins/3gears.gif

[amuseme]

How about this... The ceo of, say, Northwest Airlines for example, 'makes' a couple million bucks a year and drives the company into bankruptcy. My little business is doing OK, so I figure I'm worth at least what that joker is! This means I'm actually working for a wage 'deficit', so anything I might clear on an old car is just getting me closer to what I owe me! Anybody think 'Aunt IRiS' will buy it!?! (be nice,Dennis, I read your second post here and I know your wife!!!)

[Unreal]

Leave it to your kids...they will take possession at the value on the day of your death.

[Keith Tedford]

Perhaps we can have them back date our death certificates to 1972. Talk about a hijacked topic. http://www.yenko.net/ubbthreads/images/graemlins/wink.gif

[COPO PETE]

A year ago I was offered some big money for one of my COPO's. My accountant told me I would have to pay capital gains on it at 50%. Did'nt have a lot of bills to prove, cause a lot of the parts I paid cash for. Luckly I don't want to sell, I'm having too much fun. The thing that pissed me was if on the same day I bought two cars at $50,000, and in ten years, the one car was worth $100,000, I would have to pay capital gains on $50,000. The other car was a poor investment and sold it for $10,000, I was told "it sucks to be you". I could not claim that as a expense.
I'll just hang on to my cars thanks. That's what my boys are hoping anywayz!
Peter

[Zedder]

You actually have to pay tax on 50% of the gain at your regular tax rate. So, in effect, you pay half your tax rate (maximum of 23%) on the entire profit. And yes, it pisses me off too that if you lose money, you can't claim a capital loss http://www.yenko.net/ubbthreads/images/graemlins/no.gif

[rare1]

http://www.yenko.net/ubbthreads/images/graemlins/confused.gifI hope you guys are comfortable talking about beating the goverment....Couse i wouldnt do it here with out being really nervious exchange telephone #s much safer...."Just a suggestion"***Remember***they can get name,address from here!!!I dont want to upset you guys...The IRS is serious so just be careful what you type for the world to see.
http://www.yenko.net/ubbthreads/images/graemlins/naughty.gif**PLUS**we dont wont to share what we have learned with the nice folks at the revenue service...It's there job to tell us what we have done wrong. http://www.yenko.net/ubbthreads/images/graemlins/dunno.gif

[YENKO DEUCE REGISTRY]

Who/what makes the determination that the sale of an old car is an 'investment' as opposed to 'misc. income'?

[sean70ss]

That is a good point. I think it should be your right to make as much as you want on the car. It is like why when you go to register a car they want you to pay sales tax again? I mean what a rip off. There is 2 things in life death and taxes and the IRS wants 55% of your money when you die. So my suggestion is dont open up a can of worms and expose yourself when you dont have to.

Sean

[YENKO DEUCE REGISTRY]

[ QUOTE ]
That is a good point. I think it should be your right to make as much as you want on the car. It is like why when you go to register a car they want you to pay sales tax again? I mean what a rip off. There is 2 things in life death and taxes and the IRS wants 55% of your money when you die. So my suggestion is dont open up a can of worms and expose yourself when you dont have to.

Sean

[/ QUOTE ]

If you don't expose yourself, an IRS audit will.

[agtw31]

i bought a car off a guy a few years back,caught him in a couple white lies about the car,so i wire tranferred the entire amount owed on the car,and put a stop payment on the deposit check,and told his wife.
wife blew 5 grand on furniture the first day it was in their account.this guy was extremely unhappy.
next time i bet he won't lie.

[Zedder]

The income versus capital gains determination is usually a function of the time the asset was held and the number of transactions that took place during the tax year. A general rule of thumb is that an asset must be held for at least one year to be deemed a sale of personal property that is taxable at capital gains rates. Anything less than that amount of time is usually considered regular income.

[YENKO DEUCE REGISTRY]

Then why the need for short-term vs. long-term cap. gains rates? If something held for less than one year is misc. income, there wouldn't need to be a short term cap. rate http://www.yenko.net/ubbthreads/images/graemlins/dunno.gif

[Zedder]

I can't speak for the US regulations, but here in Canada the regulations that we are talking about apply to the sale or "real personal property" - cars, boats, antiques, etc. and the time restraints are imposed to discourage "flipping" of personal property for income purposes without paying the associated income tax rates. When researching this last year, one interest loop-hole I found was for parts sales. Any real property purchased is assumed to be purchased for a minimum of $1,000 regardless of what you paid for it. Capital gains or income generated is therefore calculated on the selling price minus $1,000. So, you can basically sell all of the parts that you like without tax implications as long as the selling price is less than $1,000. I don't sell parts, so it makes no difference to me, but those who sell via ebay can have a nice little side income coming in.

[427king]

"So, you can basically sell all of the parts that you like without tax implications as long as the selling price is less than $1,000"...........If this were true in the US, id have retired 15 years ago http://www.yenko.net/ubbthreads/images/graemlins/grin.gif http://www.yenko.net/ubbthreads/images/graemlins/grin.gif ...Actually while it may or may not be a loophole in Canada to get that 1000.00 exemption as im not familiar with the tax code there , im certain if you utilize that loophole say 100 times a year with intent to avoid business income , you will find yourself on the losing end if you are audited.

[69LM1]

Here's what we are having issues with here. Per the IRS, they plan on auditing 1 in 10 people in Katrina effected areas. Just met with the CPA re: housing. It seems as if the IRS wants you to claim your loss of your house at PURCHASE price, which, to someone who purchased a house 10 yrs ago, means that you cannot take the increase in property value (no appreciation loss). HOWEVER, on contents, they are depreciated based on purchase date, condition etc. They get you both ways!

[YENKO DEUCE REGISTRY]

So, any U.S. tax experts have any input on whether the sale of an old car is treated as an investment subjected to cap.gains tax rates, or is it misc. income subjected to income tax rates? (Jim Hughes maybe http://www.yenko.net/ubbthreads/images/graemlins/grin.gif )

[Mr70]

We need an experienced savy bean counter to log on. http://www.yenko.net/ubbthreads/images/graemlins/wink.gif

[YENKO DEUCE REGISTRY]

duplicate.

[YENKO DEUCE REGISTRY]

Nah, just somebody who has experience in taxes. There is no requirement to have any accounting experience to prepare tax returns - that's the gov for ya! Most accountants hate taxes, me included http://www.yenko.net/ubbthreads/images/graemlins/naughty.gif

[k92]

If you buy the car for less than you sell it for the profit is subject to capital gains tax. I was also told that if you restore it over lets say a 5 year period and sell it the fifth year you can only write off the expenses that you incurred in the year that you sold it,not what you spent on it the previous 4 years...

[YENKO DEUCE REGISTRY]

http://www.yenko.net/ubbthreads/images/graemlins/no.gif

[TXSS]

My suggestion is to do what I did. If you are buying, selling and/or restoring a number of cars every year, spend 500.00 and set up an "S" Corporation. That gives you the means to track ALL your expenses associated with your car dealings from your labor to health insurance. Any profits made on the cars are taxed at your standard personal tax rate. Per the US tax code you can virtually live out of an S Corp legally, plus currently only about 1.3% of S Corps are audited. However, S Corps are such a sweet deal compared to Cap. gains tax you don't need to cheat, I know I don't. Really I don't.

Also, transfers of large amounts of cash in an S Corp is a non-issue if you are not involved in illegal activities. Plus with a wire trans you can see where the money went. With a cashiers check once it's in the mail it can go anywhere in the world. It's much easier to track down a bad egg if you have his bank account number

Rick

[69LM1]

S Corp is Good Advice, even if you only do one or two cars a year. Also, car shows, swap meets and most of the associated expenses become business expenses. http://www.yenko.net/ubbthreads/images/graemlins/smile.gif

Rich