Advice from any Tax Guys on Sale of a Car

[berettafan]

tax code works like this: if you have income/gain then you pay tax....unless it is specifically exempted.

wait till the IRS decides to start targeting ebayers. nobody has an excuse.

failing to report and pay tax on a gain on the sale of property is tax fraud. period. some of you guys might not like to hear that but it's the facts plain and simple. and before anyone says it ignorance of tax code is not an excuse. it MAY keep you out of jail but it's not likely to help your pocket any.

when irs audits an individual (keep in mind there are many levels of audit) it's common for them to look at every statement on every bank/investment account that person has. if you have a large deposit from the sale of a car you will have to explain it.

[Tobra]

Prior repairs and wear items were for your use of the vehicle. You can knock expenses for restoration, probably even the last set of tires (or even the gas you put in it when you sold it) you bought for it as part of this restoration, and deduct this from the sale of the car. I don't think you can deduct for the cost of your time/labor, unless you are incorporated and did the resoration as an employee of your corporation.

Deducting the gain made via inflation is an interesting concept

[hardflex]

Include the payments made on the garage it was stored in all those years. That the garage came with the house along with it shouldn't matter. :-?

[daepp]

Claim ALL of the income.

Deduct every little item you can find-even insurance, gas, you name it. You were holding it and showing it for 35 years to build its market value.

Then if you get audited, you will have properly shown declared income, and if they have a problem with a certain line item of deduction, so be it - that's not fraud, that's tax avoidance, which AFAIK is still perfectly legal.

[Zeke]

Originally Posted by BeyGon

If you win in Vegas they take out the taxes, you don't get credit for your losses.

You can keep records of your loses. That's what the cards are for.

Personal property is not usually taxable when sold. It largely depends on your intent and whether you are in "business" selling cars and/or parts. Or even selling "finds". No history of this kind of activity will help.

[Hugh R]

The IRS says you can't deduct your labor, or "routine maintenance" They use and example of a house and say you can deduct escrow fees, costs of additions, or bringing utilities to the property, but not costs of insurance, or utilities such as electrical or gas use. I haven't found anything appropriate to an automobile. I would imagine "routine maintenance" oil, filter, plugs, fan belts, brake pads and tires, antifreeze, etc. Utilities for a vehicle would be gasoline. Non-routine maintenance to keep a vehicle alive such as a new or rebuilt: trannie, engine, differential, front end, leather, paint, chrome, etc. even if done several times to keep it alive would qualify. I would think. I'm going to contact a tax attorney to see what he says, and I'll report back. Also, a big question is what constitutes valid proof of the expense. I have many receipts, but many I haven't found yet. I do have a fairly comprehensive log book of expenses that dates back to when I got the car.

[Zeke]

Originally Posted by berettafan

tax code works like this: if you have income/gain then you pay tax....unless it is specifically exempted.

wait till the IRS decides to start targeting ebayers. nobody has an excuse.

ebay will be sending out 1099's for 2007. Anything over 600 in total sales. That's the word I get. Still, I think the ruling is based on intent. If you are simply unloading household goods and you didn't otherwise use them in business or depreciate them, then they are yours to sell. If the IRS wants to tax you, then simply show the purchase receipt and declare a loss.

The mere fact that something gained in value under your ownership is not your fault, is not controllable by you and there was no intent to profit, makes it exempt, IMO only. I'm not an enrolled agent.

[berettafan]

some terribly incorrect information getting tossed around on this thread. my advice to anyone considering the tax implications of selling ANYTHING is that you call your CPA.

Milt-
how is ebay going to send out 1099's to people when they don't have addresses and ssn's?

[berettafan]

one very important correct point made in this thread is that your time is not deductible.

that is to say you don't get to deduct 1,000 hrs @ $60 per for your own labor restoring your baby.

[pwd72s]

Originally Posted by LeeH

You do get to deduct losses from winnings.

Again, I'm no accountant, but I believe this to be true...for professional gamblers, anyway. So, toss all your losing lottery tickets in a jar. If you win, they may come in handy. If the jar gets full with no win? You may reconsider playing the lottery.

[snowman]

I doubt the IRS would even detect the sale, much less worry about collecting taxes from it. Why? because 99.9% of such sales result in a loss.

One of my coffee drinking friends is a retired IRS agent. I will mention your name to him and see what he says. (just kidding)

[makaio]

Originally Posted by snowman

I doubt the IRS would even detect the sale, much less worry about collecting taxes from it. Why? because 99.9% of such sales result in a loss.

I imagine that they would detect the deposit in his bank account.

[daepp]

Hugh - would not the maintenance items and insurance be deductible if you treated it as you would a business - the business of showing a classic car. Doesn't a museum deduct these types of expenses?

[snowman]

Originally Posted by makaio

I imagine that they would detect the deposit in his bank account.

True, but all he has to do is cite the sale of a car. End of story.

[pwd72s]

bump