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Discussion Starter · #1 ·
Selling my convertible...

I do plan on eventually buying something else and fixing my other Chevelles, but maybe not for a few months...

Is the money from the sale considered "income" (taxable?)?

I have receipts for probably more than I will get, but many reciepts are 10-12 years old... Not sure if that counts against the sales price...

Just wondering IF I will have problems if I tried to "deposit" the money in my bank account...

I know alot of people say not to worry, never had a problem, and don't put it in the bank, but I'd like to know "legally" what I can do...

Thanks
 

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I've never heard of a private individual having to report income tax on a car. Upon sale, notification is filed with the state...the yellow form showing the sale/release of ownership. California, knowing about the sale, never chases down the seller. They collect the "Use Tax" when the vehicle is registered again.
 

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If you had to buy the car with taxed income to start with (unless you're a drug dealer), you're just 'liquidating' an asset that is already taxed, you're not generating income unless you are working as a 'dealer' and doing it as a business.
 

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Legally your supposed to pay tax on the money if the sale price is more than the original price you paid for the car, unless you can show reciepts for the same or more than the difference in prices or you have kept the car for 10 years or more (my memory is foggy on if it is 10 years). To top it off it gets taxed as capitol gains if it is a big differnece.....damn greedy government.
 

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Legally if you put in the bank all at one time its fine, just try to draw it out more than $9999. at one time and the bank has to fill out forms and send to federal gov. And they are not watching us???????
 

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Guys, if you buy a car for say $2000 and put $18,000 into it and sell it for $80,000 the IRS wants their share and believe me when I say they are watching, they are watching.

What you have is a $20,000 basis in the car that you just sold for $80,000.00. The remaining $60,000.00 is a capital gain and will be taxed as such. There are ways of defferring this capital gain and I can help with that if you contact me off of the forum.

The IRS is closely watching the sales of our muscle cars as the value of them as risen so much in the past five years. Please don't think that you can just hide it from them, if they catch you, and there's a good change they might, the penalties are hefty and jail time could be included.

I'm just trying to keep you guys out of trouble and giving a "heads-up"
 

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Discussion Starter · #8 ·
Legally your supposed to pay tax on the money if the sale price is more than the original price you paid for the car, unless you can show reciepts for the same or more than the difference in prices or you have kept the car for 10 years or more (my memory is foggy on if it is 10 years). To top it off it gets taxed as capitol gains if it is a big differnece.....damn greedy government.
This is what I was thinking... I really am only worried IF I deposit all this money. Guy is supposed to bring CASH (not cashier's check). My bank said ANY cash deposit notifies the government (not just OVER $10K)...

I thought of getting a Safety Deposit box, but was informed that its "technically" illegal to put cash in a SD box (something about taking money out of circulation)...

I am pretty sure I have enough reciepts to cover the "profit", and I have owned the car for 19 years... Of course, some of the reciepts might be missing...


I have another bank that said I can bring in cash and get a cashiers check (without depositing the cash), then take those checks to my regular bank and deposit them (less than $10K each)...

"officially", the car sold for alot less then I'd like to deposit... ;)
 

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"officially", the car sold for alot less then I'd like to deposit... ;)
Maybe it's different where you live, but the sale price is recored on the title in WI. The buyer has to pay sales tax on the purchase (a few minor exceptions apply) and they know full well to look for odd prices on cars. This is what'll trigger the IRS here, not how much you may deposit in the bank
 

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I am an accountant - elcamino72 is exactly right. That fact that you either deposit or don't deposit the money in either amounts greater than or lower than $10k or $5k does not change the fact that you owe capital gains on the profit and the question implies you would prefer to hide the income. It is almost impossible to hide income these days and the penalties can be severe. How would you like to have to explain the source of every bit of the cash you spent for the last 7 years? How would like an IRS agent to find out that amount you spent is greater than the amount you earned? I can almost guarantee any amateur attempting tax evasion will get caught. It is not worth the risk. Add up your receipts, calc your new basis, see if you have a gain, and pay the tax if you do.
 

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Discussion Starter · #12 ·
I am an accountant - elcamino72 is exactly right. That fact that you either deposit or don't deposit the money in either amounts greater than or lower than $10k or $5k does not change the fact that you owe capital gains on the profit and the question implies you would prefer to hide the income. It is almost impossible to hide income these days and the penalties can be severe. How would you like to have to explain the source of every bit of the cash you spent for the last 7 years? How would like an IRS agent to find out that amount you spent is greater than the amount you earned? I can almost guarantee any amateur attempting tax evasion will get caught. It is not worth the risk. Add up your receipts, calc your new basis, see if you have a gain, and pay the tax if you do.
I understand, but not completely... What is "Profit"??? BUT how far back can I add up the receipts? Back to the purchase, 19 years ago?

And how does this relate to "hobby income"? If I reinvest in my "hobby" this tax year, do I still have a gain (I have NOT looked into the "hobby income" at all, just noticed it while doing my taxes this last week)... Even though its a single item, or part of my hobby?



If I remember correctly, the title did NOT have a place for the sales price (it is an old 1988 title). The buyer wanted 2 "Bill of Sales", one for the full amount, and one blank or lower, (presumably to save him some fees). My mother (also on the title with me) would not sign a "blank" B-o-S, but if the buyer "fills out a Bill of Sale" himself, would I ever know what he put? And I wouldn't question it (or my signature), because I did sell the car, and I doubt the DMV would ask me (they might)...

So basically, the Paper Trail shows that I sold a car for less (I also sold some parts to him)... Except I now have extra to deposit...


So, for those Accountants... Is there any time period needed for my car? Alot of my "improvements" (with reciepts) were 5-12 years ago... Can I still write those off against the selling value?

What about money I invested that I later had to invest again; say I reupholstered the interior 12 years ago, and redid it again this last year. Can I write off BOTH?

Can I write off my personal labor?

If I can use all reciepts AND write off labor, I will have no problem (reciepts might even cover it all...)

Thanks...
 

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Discussion Starter · #13 ·
Maybe it's different where you live, but the sale price is recored on the title in WI. The buyer has to pay sales tax on the purchase (a few minor exceptions apply) and they know full well to look for odd prices on cars. This is what'll trigger the IRS here, not how much you may deposit in the bank
My brother bought a Corvette 20 years ago, and the State Tax board contacted him because the sales price was too low... Luckily my brother had reciepts for a new engine and suspension rebuild, etc, performed shortly after the purchase...
 

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Yes, you must go back to the day you bought it. Figure out what you paid for it and then add up every single receipt (the IRS doesn't care about your personal time), this is your "basis". Then subtract this number from the selling price of the vehicle and this is the amount you have to pay capital gains tax on.

Now with that if you would have come to me before you sold the car there is a legal way to do what is called a 1031 exchange were you take from the sale of the car and then reinvest it into another car. But it's too late for this at this point becuase it is complicated and needs to be handled by what is called a qualified intermediary. A proper 1031 exchanage allows you to legally defer the capital gains tax. The 1031 exchange would have been sustantially cheaper than paying the capital gains tax.

One last final thought, if this guy is giving you more than $10,000 in cash you NEED to file an IRS 8300 form. This form protects you arse from any money laundering charges that the feds may have against the buyer of your car or one of his accomplices. The form must be filed by the 15th day after the receipt of the money. If you deposit more than (I think $3,500) with a bank in cash they will have to file this form and if they file it and you didn't you are in trouble). And don't try depositing $3,499.00 because they can voluntarily file the form for suspicous activity. IRS form 8300 protects you from going to jail if that money was being laundered in any way.
 

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Skip what I said....... this is probably a ploy by the IRS!

THERE WATCHING...............AND WAITING................AND........................ OHHHH HERE THEY COME I'M OUTTA HERE!!!!!!!!!!!!!!!!!!!!:D
 

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It doesnt seem fair, you buy a car, spend thousands on it sell it for more than you the cash you have into it and they tax you.
You overpay for a new car drive it for a few years sell it for alot less than what you have been paid. And you cant write it off?
Why not just go down to the local insty prints, get some carbonless paper, print out a few reciept from some garage thats gone bankrupt years ago (look in old phone books), fill out work thats been done ie, engine rebuild, paint/bodywork, interior restore etc. and use that to offset any profit you might show for it? The profit is probably on paper only anyway, if you figure all the time you spent on the car in the last 10 years, you probably sold it at a loss. Jim
 

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Jim Mac, the key is to keep records. As long as you have spent more on it than you sell it for AND you have records, you will not owe any tax. And the 'phoney receipts' deal won't work either. If you don't have cancelled checks to show where you paid the bills, then the IRS will want to know where you got the cash to pay those bills.

And to those who want to include their labor, then by all means go ahead and figure that amount in too. Just make sure that you paid taxes on it as you earned it. Example, if you claimed 5k in labor, then you would have needed to add 5k to your income at some point and paid the taxes on it. You can't win this deal. Keep good records and if you owe the tax, either pay it or worry about getting caught and paying the taxes then, plus penalties, plus interest, and possible criminal charges.
 
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