A Tax question...

[Drdogface]

I am selling a boat for less than I paid for it. Question is: Will the money received be considered income for tax purposes. I know it should not, but considering the government, State and Fed, we have I wouldn't doubt it.

Thanks in advance....

[Joe Bob]

Boats and cars have been known to depreciate. Nothing unusual.....

[Drdogface]

True enough, but some states have been known to tax...or try...garage sales..

[timchar]

As long as boat was not for business and wasn't deprecated, no taxes due. I'm no accountant but I'm fairly certain. Tim

[Don Plumley]

Income is the key word. The price you sell an asset for is irrelevant, the amount you earned over the basis (cost) is what the taxman cares about (ignoring things like business use, depreciation, improvements, etc.)

[Steve Carlton]

No taxable event.

[Drdogface]

Thanks guys....that's what I thought but one never knows...

[dad911]

Originally Posted by Drdogface

True enough, but some states have been known to tax...or try...garage sales..

Yup, in NJ back in the 80's I used to bring surplus computer equipment once a year to 'TCF', a gigantic outdoor fleamarket. Even though it was sold for pennies on the dollar compared to new, one year the taxman came around checking for resale licenses, and taking down license plates. Never heard a word, but I never went back, not worth the hassle.

As to the boat, take cash...

[ossiblue]

Originally Posted by dad911

Yup, in NJ back in the 80's I used to bring surplus computer equipment once a year to 'TCF', a gigantic outdoor fleamarket. Even though it was sold for pennies on the dollar compared to new, one year the taxman came around checking for resale licenses, and taking down license plates. Never heard a word, but I never went back, not worth the hassle.

As to the boat, take cash...

This is a slightly different situation. If it was surplus equipment that you did not personally buy, any pennies on the dollar are income to you. We all know that flea markets are not just populated by sellers disposing of their personal item at a "loss" or family heirlooms for cash. For most sellers at the larger ones, it is their business and the items are their inventory--they are selling them for more than they paid. Perfectly legit to be taxed as income and, in some cases, require a business license. I suspect the taxman, in your case, was taking down license plates to determine which sellers show up repeatedly at this and other flea markets, in an attempt to narrow down those suspected of operating a business rather than the occasional garage sale seller.

[mreid]

The buyer bears the tax burden.

[ossiblue]

Originally Posted by mreid

The buyer bears the tax burden.

In Ca., and I suspect in other states, it depends on which tax. Sales tax, yes. Personal property tax, maybe. Boats in CA are subject to annual personal property taxes. If the boat is sold, the seller is obligated to pay the personal property tax that may be due on the boat if it was sold before the due date on the tax. In the OP's situation, he will not incur income tax but may incur some personal property tax. This is the same tax that is deductible from the fed returns.

[Zeke]

He asked about income tax.

There is no 'income' on personal property and vehicles not held in a corporation's name that you sell. You bought it — you sold it. Even it you made a few dollars, if it's not a business you do or for business purposes (see the above post about depreciating a business asset), there is no tax due.

[Zeke]

He asked about income tax.

There is no 'income' on personal property and vehicles not held in a corporation's name that you sell. You bought it — you sold it. Even it you made a few dollars, if it's not a business you do or for business purposes (see the above post about depreciating a business asset), there is no tax due.

[Jim Bremner]