Selling your wing car???

[DoubleDlover]

i was curious. Im sure when a wing car owner sells his car. The very last thing they think they should do is give uncle sam Half of it in taxes. So what are the best ways to sell one of these cars and be able to keep the money that is rightfully yours??

[hawkeye]

according to my cpa, if you are conducting your car activities as a hobby, meaning you didn't deduct the purchase price or expenses of fixing up or maintaining the car,  then procedes from the sale of the car are NOT taxable.

[Mopar Nut]

Even as a hobby, here in my state if you sell over the limit of cars a year you can be taxed.

[A383Wing]

yea...same up here...I ferget what the "limit" is here in Washington State...not that I plan on getting close to it

Bryan

[pettybird]

you mean privately traded wing cars are worth more than $500?   

[hawkeye]

yea...same up here...I ferget what the "limit" is here in Washington State...not that I plan on getting close to it

Bryan  by limit , do you mean number of cars or a certain dollar amount?

[A383Wing]

number of cars per year

Bryan

[odcics2]

Capital gains tax - as far as Federal taxes are concerned.   
State taxes depend on the state...  as mentioned above.

[hawkeye]

it is beyond the scope of this site to try and sort out all the details of the federal tax code.  but before i gave the thieves (federal government) a nickel, i would get advice from an expert.

[WINGIN IT]

I asked my tax guy this a few years back when I sold a high dollar car at a loss.
I said can I deduct it as a loss. He replied  nope , it's a hobby , so no can do.
So I'll be damned if I sell a car at a profit I'm going to claim it as a capital gain...

[hawkeye]

the government tried to close a tax loophole because so many people were writing off their hobbies as a business expense.  but when they said you couldn't write off expenses it also means they can't tax the profits.  they weren't expecting people to make money on their hobbies.

[taxspeaker]

OK Guys here is the correct guidance. I am a CPA and an Enrolled Agent with 30 years experience and the President of the country's largest privately owned training company for CPA's-we train the tax guys. I am also a member of this forum and occasional poster.

Unless you are "in the business" of buying/selling/restoring cars, and very few of us are, then any losses on sales are not deductible. Soooo, keep track of all of your receipts from the day you buy it-I have- and don't ever add them up until you sell it cause you do not want to know what you have in it!

If you sell the car at a profit meaning the sales price is more than (cost + improvement cost), then you are supposed to pay tax at 28%-the car is a collectible, not a capital gain. Even if you receive all cash that is the rule. If you would choose to receive all cash I would suggest that you might want to carefully consider what to deposit in a bank-upon an IRS audit they will assume that any cash deposited to a bank is income. Read between the lines here.

I have gone so far as to use the examples of my car sales in our seminars as people really identify with them. And no, I am not some pointy headed car-ignorant CPA-I put myself through college 40 years ago working in the service department of a couple of Chrysler-Plymouth dealerships and still do all of my own mechanic work.

By the way, to be "in the business" you have to prove that you operate it regularly (buying & selling) and have a profit motive among other rules. Personally I do not write off anything related to the Superbird or Charger or Challenger, but I have every receipt. And no, I have never added them up either!

There you go-free tax advice from an expert-doesn't happen often, particularly in March.

[DoubleDlover]

hi there. Well thank you everyone for all the posts. And the last guy that was very cool as well. So how about this angle.. say you "sell" your car for 20K And the guy doesnt want to had you cash.. But will give you say.. 4 bank checks for 5 k each. If you cash then at say 1 every 4 days. would that work to stay undetected? cause i know if you slamm more then 10k i think it gets flaged.

[taxspeaker]

I would give it 11 business days between cashing

[nascarxx29]

  Keep titles open when selling fliiping . .And have $ wired to your account.

[DoubleDlover]

well what a minute.. Money wired to your account. I never even thought about that option!. Isnt that kinda the same as a deposit? Or is it somehow looked at or recorded as something different? And what does keep titles open mean ? thanks

[JB400]

Keeping an open title means not putting a date on it.

[nascarxx29]

  If I buy a car I leave it in the name I bought it from.And just have seller just sign.Unless its changed had a friend said money wired to your account  Looks better than a guy whos self employed flipping cars .And walking in depositing a bank roll

[Mopar Nut]

I heard the same thing about using PayPal, it's reported to the IRS when big money amounts is exchanged.

[DoubleDlover]

with paypal.. If you either have 20k total sent to you through out the year. or do 200 transactions. Then you have to report it and pay taxes. dont worry. They keep a record and alert the irs. So sell 19k a year. and or 180 trans actions and your cool. For now..

[DoubleDlover]

ok so buying we have covered. Now selling. if i sell my bird for 75k. what would be a good idea to make sure the gov gets what they deserve for all the hard work THEy put in it as well as me?? which should be 5 bucks..

[Mopar Nut]

If you bought fuel for your ex bird, you paid your taxes already.

[nascarxx29]

I would give it 11 business days between cashing

My friend who sold off cars and moved used the wire transaction . :Twocents:The person who wires in to your account to also can take it back or stop it even after the sale .He had 2 accounts 1 for just cars and regular account.And switched the wire transfer to personal account.As for the state if titles dated and time has elasped its $15 30 late charge to register.And the state local DMV used to be not concerened/ alarmed by a title saying 70 belvedere /road runner.As compared to Corvette or more recognized car.But nowadays Im sure thats changed to

[Mytur Binsdirti]

OK Guys here is the correct guidance. I am a CPA and an Enrolled Agent with 30 years experience and the President of the country's largest privately owned training company for CPA's-we train the tax guys. I am also a member of this forum and occasional poster.

Unless you are "in the business" of buying/selling/restoring cars, and very few of us are, then any losses on sales are not deductible. Soooo, keep track of all of your receipts from the day you buy it-I have- and don't ever add them up until you sell it cause you do not want to know what you have in it!

If you sell the car at a profit meaning the sales price is more than (cost + improvement cost), then you are supposed to pay tax at 28%-the car is a collectible, not a capital gain. Even if you receive all cash that is the rule. If you would choose to receive all cash I would suggest that you might want to carefully consider what to deposit in a bank-upon an IRS audit they will assume that any cash deposited to a bank is income. Read between the lines here.

I have gone so far as to use the examples of my car sales in our seminars as people really identify with them. And no, I am not some pointy headed car-ignorant CPA-I put myself through college 40 years ago working in the service department of a couple of Chrysler-Plymouth dealerships and still do all of my own mechanic work.

By the way, to be "in the business" you have to prove that you operate it regularly (buying & selling) and have a profit motive among other rules. Personally I do not write off anything related to the Superbird or Charger or Challenger, but I have every receipt. And no, I have never added them up either!

There you go-free tax advice from an expert-doesn't happen often, particularly in March.

There's always someone who's got to be a buzzkill.   

[Rat Exterminator]

Buzzkill no, very good info yes. Thanks to taxspeaker for the excellent and clear explanations.

[WINGIN IT]

How do you guys keep an open title on the car and still register and drive it?
Or are you only speaking of cars you buy to flip or projects and don't drive?

[JB400]

How do you guys keep an open title on the car and still register and drive it?
Or are you only speaking of cars you buy to flip or projects and don't drive?

Those would only be the ones you flip or the project cars. 

[Redbird]

Keep your receipts.
Keep your costs logged on a spreadsheet.

If you have had a real car over say a 10-20 year period you will most likely owe capital gains.

Inventing your own tax code just because you are special, what could possibly go wrong? Or really why wouldn't it go wrong?

Sports Car Market Magazine (SCM) has had a number of articles on tax issues with selling cars, estate issues, and the like. SCM has also written on the capital gains vs. collectable issue. Educate your self and also hire a CPA. If you have a business you probably already have a CPA, or you should.

[Kismgby]

I know a guy who bought a Charger for $10K and the "spare parts" for another $30K at the seller's "garage sale". 

[pettybird]

I know a guy who bought a Charger for $10K and the "spare parts" for another $30K at the seller's "garage sale".  

Rumor has it that's how we bought Marty.  We wrote a parts receipt for the seller's asking price, and were delighted to see just how well they were all bolted together before we got there  

[Kismgby]

 Isn't that kinda how you bring home a bag of nuts/bolts....fixed together so you don't lose 'em?

[mauve66]

i charge $100 hr labor and i've been working on this car for the past 20 years come May, no question about the loss/profit margin here

[pettybird]

Isn't that kinda how you bring home a bag of nuts/bolts....fixed together so you don't lose 'em?

Well, he was gonna tie them all together with string, but he ran out, so...