09-23-2021, 09:51 PM | #67 |
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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).
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09-23-2021, 09:54 PM | #68 | |
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09-23-2021, 10:42 PM | #69 |
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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.
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09-23-2021, 11:17 PM | #70 |
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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.
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09-24-2021, 03:46 PM | #71 | |
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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. |
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09-24-2021, 04:33 PM | #73 | |
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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.
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09-24-2021, 05:00 PM | #74 | |
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I hope your accountant found a way to offset the $17k so no increase to your tax owed.
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09-24-2021, 05:02 PM | #75 | |
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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. |
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09-24-2021, 05:04 PM | #76 | |
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I thought of an entirely different transaction lol. That's why it didn't make sense. I posted the car in question. |
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09-24-2021, 05:08 PM | #77 |
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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 |
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05-10-2024, 08:45 PM | #78 |
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05-10-2024, 08:59 PM | #79 |
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