[NightWriter]

Originally Posted by snareman

And I'm REALLY no accountant, but I believe if you trade a car in there is a tax advantage for the amount of the trade in, so if you trade in a $50k car on a $100k purchase you only pay taxes on the remaining $50k?

In states with sales taxes, the dealer will calculate and apply those taxes to the financing/contract, based on the sales price of the vehicle. There is no credit for trade-ins, though the dealer would, in turn, be responsible for paying the sales tax on that vehicle. As far as capital gains taxes go, I've never heard of any dealership getting involved in that matter, and ultimately you'd be responsible for reporting that when filing at the end of the year. Talk to your accountant (definitely not me).

[jimbethesda]

Originally Posted by NightWriter

In states with sales taxes, the dealer will calculate and apply those taxes to the financing/contract, based on the sales price of the vehicle. There is no credit for trade-ins, though the dealer would, in turn, be responsible for paying the sales tax on that vehicle. As far as capital gains taxes go, I've never heard of any dealership getting involved in that matter, and ultimately you'd be responsible for reporting that when filing at the end of the year. Talk to your accountant (definitely not me).

Depends on the state. In Texas, you pay sales tax on the net. $100k car with a $30k trade in, sales tax is only owed on $70k.

[wooblewobble]

You also have operating costs (oil changes, brakes, car washes, PPF, interest) that you might be able to add to your cost basis to offset any profit. And of course, if you didn't factor in the transaction costs when you bought the car as part of your cost basis (sales/use tax, registration fees, title fees), those would add to your cost basis as well.

[iviegatron]

OP has gone quiet. Either he fled the country with the $20k profit to evade taxes or dealer was BS'ing. In these crazy times, I can't tell which one.

[BGM-M3COMP]

Originally Posted by jimbethesda

You a CPA? I am. Let me start over..I'm not suggesting "ducking" or doing something illegal. Just that in almost every scenario, you won't end up with $20k extra of taxable income.

Have you ever sold a car to a dealership (not as a trade in)? I have, several times. Here's how this plays out.

Scenario 1
You sell the car to the dealership for $100k. The dealership does not ask for your SSN. I personally wouldn't do anything. I would not bother to put the $100k on my tax return. In the very unlikely scenario that I got a letter from the IRS asking about the $100k, I would first report that $80k of it was my cost basis, then I would show my loss on previous car(s) that total at least $20k.

Net result: No increase in taxes.

This is the most likely scenario. No dealership asked me for my SSN.

Scenario 2
The dealership does ask for my SSN for reporting purposes. I then get a 1099 for $100k at the end of the year. I do the same thing I would have done in scenario 1, report the $80k of my tax basis and also a prior loss.

Net result: No increase in taxes

There is no scenario where the dealership reports to the IRS that they gave me a $20k profit. It's either $0 or $100k.

No brother i'm not suggesting i know more than you. I am just going by my past experiences and what i do know. If you're a CPA, you obviously know all the ins and outs. And clearly the expert here.

Trust me i have been going to the same accountant since 2001. She knows what to put, given ALL the necessary info and paperwork provided. Whether it's cars bought, houses, earned income etc. I do it right.

There was one year she was away to her country and i didn't want her sister to take care of my taxes so i tried to do it myself online. And i got fucked royally. Not in the sense i owed money but in a sense that my refund was basically 25% of what i normally get from my accountant.

Anyway from my experiences, this is what happened.

Sold a car to a dealer and made 17k profit.

BUT, i still owed about 5k on the loan.

The dealer paid the loan off, same as you would if you were to trade in a car with an upside down loan and the negative equity rolls over to the new car loan. The dealer paid off the 5k.

The 17k was made with a separate check, with my name on it.

That dealer did get my SSN. In fact, i had to fill out a form. Similar to a buying experience, except no credit was ran.

This is similar to me accepting winnings from draftkings. 3 years ago, i made a total of 22k in earned winnings from draftkings however there is a 1099 you need to fill out. Or you can just evade taxes and never filing those winnings but then good luck.

If your scenarios you pointed out is accurate 100% of the time in all scenarios, i would hard pressed to believe anyone who is in the same situation, would jump on that type of procedure.

Like i said earlier, you can't beat the IRS. You can try to go around them but is it worth it if they somehow found out?

Cash money, yes easy to hide. Not paper checks with your name on them.

[kingmonkeyjr]

Sign me up lol take the money. It's just a car can always get another one

[jimbethesda]

Originally Posted by BGM-M3COMP

No brother i'm not suggesting i know more than you. I am just going by my past experiences and what i do know. If you're a CPA, you obviously know all the ins and outs. And clearly the expert here.

Trust me i have been going to the same accountant since 2001. She knows what to put, given ALL the necessary info and paperwork provided. Whether it's cars bought, houses, earned income etc. I do it right.

There was one year she was away to her country and i didn't want her sister to take care of my taxes so i tried to do it myself online. And i got fucked royally. Not in the sense i owed money but in a sense that my refund was basically 25% of what i normally get from my accountant.

Anyway from my experiences, this is what happened.

Sold a car to a dealer and made 17k profit.

BUT, i still owed about 5k on the loan.

The dealer paid the loan off, same as you would if you were to trade in a car with an upside down loan and the negative equity rolls over to the new car loan. The dealer paid off the 5k.

The 17k was made with a separate check, with my name on it.

That dealer did get my SSN. In fact, i had to fill out a form. Similar to a buying experience, except no credit was ran.

This is similar to me accepting winnings from draftkings. 3 years ago, i made a total of 22k in earned winnings from draftkings however there is a 1099 you need to fill out. Or you can just evade taxes and never filing those winnings but then good luck.

If your scenarios you pointed out is accurate 100% of the time in all scenarios, i would hard pressed to believe anyone who is in the same situation, would jump on that type of procedure.

Like i said earlier, you can't beat the IRS. You can try to go around them but is it worth it if they somehow found out?

Cash money, yes easy to hide. Not paper checks with your name on them.

It's all good man. Your selling the car to the dealer story doesn't reconcile though. Or maybe I just don't understand it.

If your profit was $17k, the check would be a lot higher. Profit = sales price - cost. Did you sell the car to the dealer for $22k and paid $5k for the car originally? That's the only way your math works. And then even then, it doesn't make any sense. They should report $22k, even if $5k went to pay off a loan.

And yeah, gambling winnings are a whole other thing.

And just to make my point one more time. I was never suggesting to try to beat the IRS, just that the OP's scenario won't likely result in increasing his taxable income.

Please do continue to use a CPA for your taxes!! You sound like you need the help, as most do, so no judgement.

[jimbethesda]

Originally Posted by BGM-M3COMP

It was a car i had for maybe 3 months. Similar scenario to OP in this very thread.

This transaction was a little over 10 years ago so i don't know all the numbers exactly. I'll use simple values as an example to try to make sense of this.

I still had an open loan for 30k. The dealer bought the car from me for 47k.

They paid the finance company what i owed (the 30k loan i just took out 3 months prior) and that was completed.

They wrote me a separate check for the remaining value of the total amount they wanted to give me for the car, which i "profited". The 17k.

The car was NOT paid for. I had just got the car. And i didn't like the car so when the opportunity of 17k arose, i took it.

They didn't write a check to me for 47k, so i can pay the loan myself, and come back to the dealer with the car when the title was mailed to me from the loan company.

Ah, ok. If they did report it to the IRS it would have been the $47k amount though. The paying off the loan part doesn't have any impact. Paying off a loan is the same as giving you the money directly. In fact, many people are surprised when they negotiate a loan settlement and end up having to pay taxes on the amount forgiven even if they didn't receive any money.

I hope your accountant found a way to offset the $17k so no increase to your tax owed.

[BGM-M3COMP]

Originally Posted by jimbethesda

It's all good man. Your selling the car to the dealer story doesn't reconcile though. Or maybe I just don't understand it.

If your profit was $17k, the check would be a lot higher. Profit = sales price - cost. Did you sell the car to the dealer for $22k and paid $5k for the car originally? That's the only way your math works. And then even then, it doesn't make any sense. They should report $22k, even if $5k went to pay off a loan.

And yeah, gambling winnings are a whole other thing.

And just to make my point one more time. I was never suggesting to try to beat the IRS, just that the OP's scenario won't likely result in increasing his taxable income.

Please do continue to use a CPA for your taxes!! You sound like you need the help, as most do, so no judgement.

This transaction was about 10 years ago so i don't remember all the details.

But i did sell my car to a dealer more than once.

Wait, My fault, this wasn't the 5k owed loan. That was something different.

This car i had for 3 months, that i had owned 30k on, or 32k i can't remember. It was an open loan.

The dealer wanted to give me 47k for the car. They paid chase, the 30k i owed) and with a separate check, the 17k.


EDIT: Sorry the 5k owned loan was an entirely different car. I had a GTO. But i forgot i traded that car in.

The car in question was my audi.

[BGM-M3COMP]

Originally Posted by jimbethesda

Ah, ok. If they did report it to the IRS it would have been the $47k amount though. The paying off the loan part doesn't have any impact. Paying off a loan is the same as giving you the money directly. In fact, many people are surprised when they negotiate a loan settlement and end up having to pay taxes on the amount forgiven even if they didn't receive any money.

I hope your accountant found a way to offset the $17k so no increase to your tax owed.

I fixed the post.

I thought of an entirely different transaction lol. That's why it didn't make sense.

I posted the car in question.

[BGM-M3COMP]

You're right, the paying of the loan part probably means nothing except when dealing with dealers, who knows what they do to save their ass. And as long as i don't get stiffed with any money i wanna make, or the taxes, as talked about now, then i don't mind what goes on behind the scenes.

And yes my accountant is the best. That's why i been going to her since 2001 lol.

Single guy with no kids, and i file 1 dependent (me) and yet i still get nearly all my taxes back each year? She's the MVP lol

[1S0J1]

Originally Posted by daveg520

Here are the only two pictures I have right now.

I live the car and kind of just want to see what they would offer, I still can believe how crazy the car market is right now.

You said non-comp? Did you install the comp exhaust?

[BryanCO]

Originally Posted by 1S0J1

You said non-comp? Did you install the comp exhaust?

Holy three yr old thread. Oh, look like daveg520 hasn’t posted since 2021…