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TDCTDI
Samba Advocatus Diaboli
Joined: August 31, 2013
Posts: 12850
Location: North Carolina
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 Posted: Tue Apr 17, 2018 4:37 am Post subject: Re: Dream bus gift in New York: '71 |
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Yes, thank you. What if the stakes were higher and said collector car was more like $400,000. I have been told that resale of cars (private seller) aren’t generally taxed due to their depreciation. This seems like it would be a way to transfer greater sums of “money” to another without taxman intervention. The same would be true if any collectible (other collectibles might be better due to not having to transfer ownership).
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Everybody born before 1975 has a story, good, bad, or indifferent, about a VW.
GOFUNDYOURSELF, quit asking everyone to do it for you!
An air cooled VW will make you a hoarder.
Do something, anything, to your project every day, and you will eventually complete it. |
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Sharp64
Samba Member
Joined: August 27, 2015
Posts: 5304
Location: Central Florida
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| Posted: Tue Apr 17, 2018 6:52 am Post subject: Re: Dream bus gift in New York: '71 |
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| TDCTDI wrote: |
| Yes, thank you. What if the stakes were higher and said collector car was more like $400,000. I have been told that resale of cars (private seller) aren’t generally taxed due to their depreciation. This seems like it would be a way to transfer greater sums of “money” to another without taxman intervention. The same would be true if any collectible (other collectibles might be better due to not having to transfer ownership). |
I would think the problem with this scenario is that in order to get the cash, the person receiving the gift would have to sell the car. Once the car sells they then have to pay income on that sale wouldn't they? If the car was gifted to a family member there really isn't any reason to as mentioned there is a $5m exemption, so gifting the car would be stupid because then the family member would have to pay taxes on the sale of the car vs having it exempted. If the person receiving the car isn't a family member, I guess it depends on the tax rate of income vs a gift. If they are gifted the car and only taxed on the amount valued by the gifter and then turn around and have to pay income tax when they sell the car, wouldn't they actually be worse off than just paying the tax on the true gifted amount?
Not a tax person, but this is an interesting discussion.
Regarding the story, kind of cool, but I understand what is being meant by Millennials seeing this story and beginning to put letters on all of our cars. Monkey see, monkey do. Kind of how I have seen at least 5-6 people in various VW FB pages getting added and immediately asking for contributions to their GFM accounts to restore their dream car.
_________________
1960 Indigo Blue Ragtop (Blue Barry)
1967 Ghia
1985 Westy Money Pit
“...some men aren't looking for anything logical, like money. They can't be bought, bullied, reasoned, or negotiated with. Some men just want to watch the world burn.” - Michael Caine |
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TDCTDI
Samba Advocatus Diaboli
Joined: August 31, 2013
Posts: 12850
Location: North Carolina
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| Posted: Tue Apr 17, 2018 7:03 am Post subject: Re: Dream bus gift in New York: '71 |
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Do they tax these high dollar cars going through auctions? Is that part of the buyer & seller premiums? How many people actually declare the profits when they sell a car for more than it's purchase price? Especially when it's sold privately?
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Everybody born before 1975 has a story, good, bad, or indifferent, about a VW.
GOFUNDYOURSELF, quit asking everyone to do it for you!
An air cooled VW will make you a hoarder.
Do something, anything, to your project every day, and you will eventually complete it. |
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Sharp64
Samba Member
Joined: August 27, 2015
Posts: 5304
Location: Central Florida
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| Posted: Tue Apr 17, 2018 7:08 am Post subject: Re: Dream bus gift in New York: '71 |
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| TDCTDI wrote: |
| Do they tax these high dollar cars going through auctions? Is that part of the buyer & seller premiums? How many people actually declare the profits when they sell a car for more than it's purchase price? Especially when it's sold privately? |
Good question. I guess it depends on if you actually made a profit? Since the vast majority of used car sales end in a loss, I'm not sure how it works if you sell a car at auction and make a profit? If you're a business, obviously you would have to pay taxes as it would count as income. I would think individuals would fall under the rules? I know when it comes to selling a house and making a profit, this can be non-taxable as long as the home is owned for a certain amount of time or something like that. That's why people are able to sell homes they paid $30k for when they were young for huge amounts in their later years and they aren't required to pay taxes on the sale. But if you are flipping houses each month and making a profit, the income is then taxable.
_________________
1960 Indigo Blue Ragtop (Blue Barry)
1967 Ghia
1985 Westy Money Pit
“...some men aren't looking for anything logical, like money. They can't be bought, bullied, reasoned, or negotiated with. Some men just want to watch the world burn.” - Michael Caine |
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OB Bus
Samba Member
Joined: February 09, 2003
Posts: 2537
Location: Ocean Beach in Beautiful BLUE California
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| Posted: Tue Apr 17, 2018 7:09 am Post subject: Re: Dream bus gift in New York: '71 |
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People have raised a number of good questions here that will take time to give a detailed response to. We are volunteering at a food distribution program today and won't be back until late this afternoon. If no one else has jumped in I will be happy to respond to everyone then.
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Larry in OB
Stop dead photo links! Post your photos to The Samba Gallery!
69 Westfalia and 2002 Eurovan Camper. |
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Sharp64
Samba Member
Joined: August 27, 2015
Posts: 5304
Location: Central Florida
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| Posted: Tue Apr 17, 2018 7:17 am Post subject: Re: Dream bus gift in New York: '71 |
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From what I googled, if you made a net profit on the vehicle, yes you would have to report it as income. Basically, you take the purchase price of the car and any "long term" improvements and add them to the cost including any taxes etc paid and then deduct it from the sale price. Profit=report it to the IRS. If you took a loss, you don't. Seems shady... If you make money you have to report it, if you take a loss you don't get to deduct it? Typical. lol. My guess is that the vast majority of car sales that aren't for big money, are rarely if ever reported to the IRS.
Add to this the buyer has to pay the state sales tax as well. What a racket.
I've never profited on a car sale, so no worries here. 
_________________
1960 Indigo Blue Ragtop (Blue Barry)
1967 Ghia
1985 Westy Money Pit
“...some men aren't looking for anything logical, like money. They can't be bought, bullied, reasoned, or negotiated with. Some men just want to watch the world burn.” - Michael Caine |
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vwinnovator
Samba Member
Joined: July 11, 2005
Posts: 1555
Location: Still doing it in the back of your VW
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| Posted: Tue Apr 17, 2018 7:51 am Post subject: Re: Dream bus gift in New York: '71 |
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| Sharp64 wrote: |
| TDCTDI wrote: |
| Do they tax these high dollar cars going through auctions? Is that part of the buyer & seller premiums? How many people actually declare the profits when they sell a car for more than it's purchase price? Especially when it's sold privately? |
Good question. I guess it depends on if you actually made a profit? Since the vast majority of used car sales end in a loss, I'm not sure how it works if you sell a car at auction and make a profit? If you're a business, obviously you would have to pay taxes as it would count as income. I would think individuals would fall under the rules? I know when it comes to selling a house and making a profit, this can be non-taxable as long as the home is owned for a certain amount of time or something like that. That's why people are able to sell homes they paid $30k for when they were young for huge amounts in their later years and they aren't required to pay taxes on the sale. But if you are flipping houses each month and making a profit, the income is then taxable. |
hmm..
your forgetting the "hidden tax" of home ownership.
20yrs of property tax, maintenance costs/upkeep could easily run a home owner $30-40K
On a home sale with a say $200K profit, that $30/40K spent easily equates to about the same as the capital gains tax.
in a house flipping scenario, all the repairs/maintenance, taxes are expendable to the flipping "business" and offset the taxable "profit".
reality is, the government figured all the scenarios out long, long ago...
The illusion of home ownership as a "good investment" may only have been a lure to persuade the american ppl to take on the obligation of a life long property tax liability..generating perpetual tax dollars for the government.
You never really get to OWN that property, you merely get the right to occupy it as long as those property taxes are pd.
Last edited by vwinnovator on Tue Apr 17, 2018 7:56 am; edited 1 time in total |
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TheDon
Samba Member
Joined: July 14, 2005
Posts: 498
Location: Windermere
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| Posted: Tue Apr 17, 2018 7:55 am Post subject: Re: Dream bus gift in New York: '71 |
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| TDCTDI wrote: |
WARNING
Too bad I can’t read the article due to all the pop up ad crap that keeps locking up my phone.
Brief synopsis...
16yr old slips note through vent window & it falls to floor, “oh no, they’ll never see it”, original owner finds & keeps note, eight years later original owner passes away, son finds note & gives vehicle to the kid that wrote note. That’s as far as I could get. Good looking white on blue bus from pic in article. I’m sure there’s some pissed off relative or tax man.
Every millennial’s dream come true. Expect more notes on your cars. |
I love how people generalize an entire generation of people because of the acts of one person... good job to you
When I was in college I was big into old mercedes diesels. One day while driving home I spotted an E320 Cabriolet over heating so I flagged the driver down and got him to pull over and I helped him out since those cars had a headgasket flaw which his was showing signs of. I arranged a tow truck (flat bed since mercedes cannot be towed with the rears moving), arranged a hotel by the shop I knew had a great reputation for older german cars, and drove them to the shop. I didn't have to do any of the above but I wanted to because I saw someone in need that just so happen to have a classic mercedes like me.
a few years later I get an email from the owners asking if I would like to take the car since they were getting older and didn't want to pour money into a 20 year old mercedes convertible. They said I could keep the car and enjoy it or sell it to pay for school. I paid tax, tag, and title transfer fees on it for fair market value which we agreed upon. the tax collector office knew what was up and was very helpful. I drove that car for 3 years of college and eventually sold it, wish I had not sold it but I have car ADHD. I'm still friends with the previous owners and his wife recently passed and she was such a nice person.
guess I'll start expecting free cars from the old ladies I help change their flat tires.
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Sharp64
Samba Member
Joined: August 27, 2015
Posts: 5304
Location: Central Florida
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| Posted: Tue Apr 17, 2018 8:07 am Post subject: Re: Dream bus gift in New York: '71 |
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| vwinnovator wrote: |
| Sharp64 wrote: |
| TDCTDI wrote: |
| Do they tax these high dollar cars going through auctions? Is that part of the buyer & seller premiums? How many people actually declare the profits when they sell a car for more than it's purchase price? Especially when it's sold privately? |
Good question. I guess it depends on if you actually made a profit? Since the vast majority of used car sales end in a loss, I'm not sure how it works if you sell a car at auction and make a profit? If you're a business, obviously you would have to pay taxes as it would count as income. I would think individuals would fall under the rules? I know when it comes to selling a house and making a profit, this can be non-taxable as long as the home is owned for a certain amount of time or something like that. That's why people are able to sell homes they paid $30k for when they were young for huge amounts in their later years and they aren't required to pay taxes on the sale. But if you are flipping houses each month and making a profit, the income is then taxable. |
hmm..
your forgetting the "hidden tax" of home ownership.
20yrs of property tax, maintenance costs/upkeep could easily run a home owner $30-40K
On a home sale with a say $200K profit, that $30/40K spent easily equates to about the same as the capital gains tax.
in a house flipping scenario, all the repairs/maintenance, taxes are expendable to the flipping "business" and offset the taxable "profit".
reality is, the government figured all the scenarios out long, long ago...
The illusion of home ownership as a "good investment" may only have been a lure to persuade the american ppl to take on the obligation of a life long property tax liability..generating perpetual tax dollars for the government.
You never really get to OWN that property, you merely get the right to occupy it as long as those property taxes are pd. |
I didn't forget about any of that actually. I was using this as a simple example of how selling a home for profit if its a long term home isn't taxable whereas flipping a house every few months is. If I buy a home at an auction for $25k, dump $50k into it and sell it for $150k within a months time, I would be liable for the profit. If I buy a house for $25k, live in it for 2 years and put the same $50k and sell it for $150k, that is in fact not taxable as income. It has to do with the length of time and I believe whether you claim it as your residence. There is also a time limit. We had a situation where we bought the home we live in, and within a short amount of time it escalated in value. We considered selling it for various reasons, and after looking into it, realized we would have been taxed on the income from selling the home due to the short length of time we owned it vs the amount of money we would have made on it due to the sudden increase in home values in the area. We could have written off some costs, but there technically would have been about $10-15k in profit from the home that we could have gotten taxed on because it was under the 2 year ownership requirement.
Not commenting on the other issues as I don't give a shit.
_________________
1960 Indigo Blue Ragtop (Blue Barry)
1967 Ghia
1985 Westy Money Pit
“...some men aren't looking for anything logical, like money. They can't be bought, bullied, reasoned, or negotiated with. Some men just want to watch the world burn.” - Michael Caine |
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EverettB 
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Joined: April 11, 2000
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Location: Phoenix Metro
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OB Bus
Samba Member
Joined: February 09, 2003
Posts: 2537
Location: Ocean Beach in Beautiful BLUE California
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| Posted: Tue Apr 17, 2018 3:34 pm Post subject: Re: Dream bus gift in New York: '71 |
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| EverettB wrote: |
| Thanks OB, I didn't know gift taxes didn't apply to people who are not family members. |
No. Gift tax liability potentially applies to everyone...family member or not. Gift tax and estate taxes can wildly overlap creating a bonanza for attorneys and accountants.
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Larry in OB
Stop dead photo links! Post your photos to The Samba Gallery!
69 Westfalia and 2002 Eurovan Camper. |
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OB Bus
Samba Member
Joined: February 09, 2003
Posts: 2537
Location: Ocean Beach in Beautiful BLUE California
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| Posted: Tue Apr 17, 2018 3:41 pm Post subject: Re: Dream bus gift in New York: '71 |
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| TDCTDI wrote: |
| Yes, thank you. What if the stakes were higher and said collector car was more like $400,000. I have been told that resale of cars (private seller) aren’t generally taxed due to their depreciation. This seems like it would be a way to transfer greater sums of “money” to another without taxman intervention. The same would be true if any collectible (other collectibles might be better due to not having to transfer ownership). |
Q #1: Taxed by who? Sales tax? Income Tax? Gift Tax? Estate taxes?
Any transfer that is a legitimate gift is potentially subject to gift tax.
A $400K collector car transferred as a legitimate gift from one person/entity to another would generally not generate tax on the recipient. It might generate tax on the donor.
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Larry in OB
Stop dead photo links! Post your photos to The Samba Gallery!
69 Westfalia and 2002 Eurovan Camper. |
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OB Bus
Samba Member
Joined: February 09, 2003
Posts: 2537
Location: Ocean Beach in Beautiful BLUE California
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| Posted: Tue Apr 17, 2018 3:50 pm Post subject: Re: Dream bus gift in New York: '71 |
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| Sharp64 wrote: |
| TDCTDI wrote: |
| Yes, thank you. What if the stakes were higher and said collector car was more like $400,000. I have been told that resale of cars (private seller) aren’t generally taxed due to their depreciation. This seems like it would be a way to transfer greater sums of “money” to another without taxman intervention. The same would be true if any collectible (other collectibles might be better due to not having to transfer ownership). |
I would think the problem with this scenario is that in order to get the cash, the person receiving the gift would have to sell the car. Once the car sells they then have to pay income on that sale wouldn't they? If the car was gifted to a family member there really isn't any reason to as mentioned there is a $5m exemption, so gifting the car would be stupid because then the family member would have to pay taxes on the sale of the car vs having it exempted. If the person receiving the car isn't a family member, I guess it depends on the tax rate of income vs a gift. If they are gifted the car and only taxed on the amount valued by the gifter and then turn around and have to pay income tax when they sell the car, wouldn't they actually be worse off than just paying the tax on the true gifted amount?
Not a tax person, but this is an interesting discussion.
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Once again, the recipient of a legitimate gift is generally not taxed on the fair market value of the gift. The donor might have a tax liability.
There is a huge difference between receiving the same asset as a gift vs. as an inheritance. Let us use the $400K car as an example and assume the donor paid $100K for it.
If the donor gave the car to someone, the recipient's tax basis would be $100K. If the recipient then sold the car for $400K they would have to report a $300K taxable gain on the sale.
If the recipient inherited the same car, they would be entitled to a "stepped up basis" of the fair market value upon the date of death (or an alternate date), and the recipient's tax basis would be $400K. If the recipient sold the car for $400K their taxable gain would be $0.
In both cases (gift or inheritance) the recipient would have no tax liability on the receipt of the vehicle.
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Larry in OB
Stop dead photo links! Post your photos to The Samba Gallery!
69 Westfalia and 2002 Eurovan Camper. |
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EverettB
Administrator
Joined: April 11, 2000
Posts: 69813
Location: Phoenix Metro
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| Posted: Tue Apr 17, 2018 10:16 pm Post subject: Re: Dream bus gift in New York: '71 |
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| OB Bus wrote: |
| EverettB wrote: |
| Thanks OB, I didn't know gift taxes didn't apply to people who are not family members. |
No. Gift tax liability potentially applies to everyone...family member or not. Gift tax and estate taxes can wildly overlap creating a bonanza for attorneys and accountants. |
Thanks for the clarification, my text above was worded poorly.
I should have said I didn't know gifts and the possible lack of taxes could apply to non-family members too.
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Abscate
Samba Member
Joined: October 05, 2014
Posts: 22648
Location: NYC/Upstate/ROW
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| Posted: Wed Apr 25, 2018 9:58 am Post subject: Re: Dream bus gift in New York: '71 |
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| Quote: |
| reality is, the government figured all the scenarios out long, long ago... |
Just read and digest that fact and you will be fine, when you think you have found a way to avoid tax on shinola.
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