Here's a scenario to consider in your response.
Presuming that say a "Shelby" was purchased in 1970 for $1,000, and kept and maintained all these years and sold now for $150,000, is the amount dealt with like selling a stock or like selling a house?
The reason that I ask, a stock has no maintanence cost. If I bought 1,000 shares of Apple at $4 per share and sell it now there was no cost to me of maintaining it.
On a car, there were 40 years of insurance, repairs, and other maintenance to maintain it's value. Without actually totaling the number, that could be more then the actual sales price of the car?
So how does this get declared? Is there a "discussion" or debate with the IRS about that AND does this have to be declared as "ordinary income"?
Simple, original purchase price + repairs+maintenance+expenses related to the car
Subtract selling price
Pay capital gains on those profits
C.G. currently at 15% but the new administration wants to raise in order to fund other programs.....
I need more opinions. CPA says it's the same as stocks.
I have the receipts for parts from the 70's as well as from the restoration from a few years ago but most folks don't hang on to them that long. If you don't have them then I'm pretty sure taxes would be owed on the entire amount. :'( >:( The down side to the receipts from the 70's, stuff was so cheap they wouldn't help much. I guess it's a good thing I don't ever plan on selling. :)
TOB
Sort of like selling on ebay. EBAY assumes that everything you sell is 100% profit, thus, YOU PAY!!! LOL What a nightmare!
Quote from: shelbydoug on March 16, 2022, 11:13:17 AM
I need more opinions. CPA says it's the same as stocks.
For long term ownership like yourself, a good accountant will negate any capital gains, as the car was originally purchased as a daily driver, or a weekend toy, and not as an investment. Not all "perceived profits" will be treated like a short or long term stock trade would.
Now, if you purchased a car last year, and sold it this year for a large profit, then yes, short term capital gains will apply. Yet, once again, a good accountant will lesson the blow to your tax bill.
Bill
Quote from: shelbydoug on March 16, 2022, 11:13:17 AM
I need more opinions. CPA says it's the same as stocks.
Nope, no more opinions listen to your CPA and if you are selling, here is some info :
House Democrats on Monday proposed raising the top tax rate on capital gains and qualified dividends to 28.8%, one of several tax reforms aimed at wealthy Americans to help fund a $3.5 trillion budget plan. The top federal rate would be 25% on long-term capital gains, which is an increase from the existing 20%
The above prompted us to sell two properties
Quote from: Bill on March 16, 2022, 11:50:02 AM
Quote from: shelbydoug on March 16, 2022, 11:13:17 AM
I need more opinions. CPA says it's the same as stocks.
For long term ownership like yourself, a good accountant will negate any capital gains, as the car was originally purchased as a daily driver, or a weekend toy, and not as an investment. Not all "perceived profits" will be treated like a short or long term stock trade would.
Now, if you purchased a car last year, and sold it this year for a large profit, then yes, short term capital gains will apply. Yet, once again, a good accountant will lesson the blow to your tax bill.
Bill
Thanks Bill.
note to self: "Good Accountant" could be needed down the road.
A car purchased yea4s ago as part of a "hobby", that requires all of the above noted expenses - PLUS indoor parking/storage - certainly seems a different situation vs stock/bonds.
Yes, you need professional advice, not Internet advice. However, I don't think you can add routine maintenance costs to your cost basis. Things you spent money on to improve the cars value help to increase your cost basis but maintenance does not. That has been my understanding.
I have been telling him to get professional advice for years.
8)
I would seek sound legal or CPA advice as all say above.
But a few things you might bring up, not sure if they will pertain or not;
As mentioned above, expenses related to the cost of ownership should be deductible.
Insurance, yearly licensing taxes, maintenance, storage will real receipts, improvement costs, and perhaps more, ?
You might mention all this to whomever you confer with.
Like trades may play a part, kind of like in real estate which is a common in practice.
Sometimes, you have to step up to something worth at least $1.00 dollar more, there may be exceptions?
You may be able to "defer" some of the proceeds.
YOU, may not touch the money from the sale at that time, will have to be through an attorney.
Say your selling at 150K, add up your expenses you encountered, >>> hopefully with receipts>> and hold to present to your chosen tax person.
Find an investment vehicle >>> say worth 50K that you can live with and enjoy.
The chosen investment vehicle will be bought through your attorney with the sales money HE collected as your legal counsel, proceeds are then profit after the above deductions, and the attorney can wire or send a check in your name then.
Proceeds are then profit after the >>> above deductions for your tax person are figured in, CPA or ?
Lets say 150K, minus >>>500. to attorney, minus 40 years of deductions, $22,000, original purchase $1000. and 50K for new investment vehicle.
Maybe 75 K for tax base then ?
,
Would be good to start a new portfolio on the new investment automobile.
When you sell the NEW investment vehicle, taxes will then be fully due at current rates.
Run it past a CPA that has true knowledge, not a part time Jan-April tax office.
Hope all works out.
Respectfully,
john
Quote from: Coralsnake on March 16, 2022, 01:58:25 PM
I have been telling him to get professional advice for years.
8)
No, no. You keep saying, "get help...please". ::)
FYI - but again consult a CPA
To determine exactly how much you've gained on your sale, you'll need to locate the original purchase price of your vehicle, minus any taxes you paid when you bought it.
If you made any improvements to the car, such as adding a stereo system or having it repainted, you'll add the cost of those to the original purchase price.
Do not include any money you spent on maintenance, such as oil changes or tire rotation. If the amount your buyer paid for the car is higher than what you have invested in the car, you will report the capital gain on Schedule D, Form 1040, on the line marked "Capital Gains and Losses." If you had the vehicle one year or less before selling it, it's a short-term capital gain.
Otherwise, you'll list it as a long-term capital gain.
This is where I also think dealing with a person one on one will pay off better than a auction house. Cash has not been outlawed yet, or has it?
My own 2 cents as they seem to think and say.
Selling a vintage Shelby is one thing but a Cobra that has appreciated from $5,000 to a million, now that's an issue with angst.
You'll be expected to pay profits on any amount you received above your purchase price that was not received in a brown paper bag at the time of the sale.
Cash is your friend.
Listen take the money via a check or direct deposit, pay all that is due to your government friends. Trust me you will sleep soundly
Cash. Take only cash.
Quote from: FL SAAC on March 16, 2022, 07:13:40 PM
Listen take the money via a check or direct deposit, pay all that is due to your government friends. Trust me you will sleep soundly
Don't worry for me. NO ONE is putting money in my hands or has offered to. It was just a question since I am getting various answers from CPA's and I need to hear from others that have gone through this.
As always, cash talks and nobody walks BUT there are issues with cash as well. You can readily buy AR15's (are we up to 16's yet?) but ammo is in short supply.
With my two sons, we can easily get them in a crossfire considering the local terrain of hills and valleys and I'm remembering that I could only shoot 99 out of 100 and the smell of gunfire makes me sneeze so it gives away my position too readily?
My night vision is much better now though.
Quote from: rockhouse66 on March 16, 2022, 01:21:06 PM
Yes, you need professional advice, not Internet advice. However, I don't think you can add routine maintenance costs to your cost basis. Things you spent money on to improve the cars value help to increase your cost basis but maintenance does not. That has been my understanding.
Or IRS advice!!
Cash will not help you at Mecum, BJ, Ebay, or any "public" sales event. I know I sound like a broken record, but why buy at those "places"? One on one sales where you have about 5 people involved. Me, myself, and I....and the seller.