Car Sale/Taxable Income Question.

Talk to a tax accountant, they know the rules.

truebluebowtie wrote:
> I'm getting ready to sell my '90 and need an answer if anyone can provide
> one. Is there a way to sell a car privately in PA and put the money in
> some sort of account so that it will not be considered income this year?
> Maybe a deferred payment/account of some kind for tax deferrment until
> next year?
> TIA
>
>

"truebluebowtie" > wrote in message
...
> In article >
> Bob I > wrote:
>
> Obviously the best route but thought someone might have some insight here.
>
>
I don't know PA law, but I am hoping there is enough sense in it to
recognize that the State can't tax the buyer and the seller both on the same
exchange of money/property. When the buyer transfers the ownership, he will
pay taxes on the amount he reports as the purchase price. I don't believe
you will also be taxed or even need to report that same amount and subject
it to a second taxing.

Don't try that with the '67 435 hp coupe you bought for $40,000 7 years ago
and sold just recently for $150,000.

I think you will find several get their hands in on your gain.


"BDragon" > wrote in message
...
>
> "truebluebowtie" > wrote in message
> ...
>> In article >
>> Bob I > wrote:
>>
>> Obviously the best route but thought someone might have some insight
>> here.
>>
>>
> I don't know PA law, but I am hoping there is enough sense in it to
> recognize that the State can't tax the buyer and the seller both on the
> same
> exchange of money/property. When the buyer transfers the ownership, he
> will
> pay taxes on the amount he reports as the purchase price. I don't believe
> you will also be taxed or even need to report that same amount and subject
> it to a second taxing.
>
>

> Don't try that with the '67 435 hp coupe you bought for $40,000 7 years
> ago and sold just recently for $150,000.
>
> I think you will find several get their hands in on your gain.
>
>
> >>>
>> I don't know PA law, but I am hoping there is enough sense in it

I don't understand why a state would be entitled to any money made on a car.
If there is a law saying if you make money on a car, the other edge of that
law would give you a deduction for any money lost when selling a car (?)
How many people actually make money when they trade in ?
I think this is a loosing proposition for the state if it is in fact true.
Now if your business is buying and selling autos the that is different.
Also any hobby, if not used as a deduction would not qualify as income
(federally speaking).
IMHO FWIW
I really would like to hear more about this supposed PA law, if anyone
really knows the truth

kickstart

BDragon wrote:
> "truebluebowtie" > wrote in message
> ...
>
>>In article >
>>Bob I > wrote:
>>
>>Obviously the best route but thought someone might have some insight here.
>>
>>
>
> I don't know PA law, but I am hoping there is enough sense in it to
> recognize that the State can't tax the buyer and the seller both on the same
> exchange of money/property. When the buyer transfers the ownership, he will
> pay taxes on the amount he reports as the purchase price. I don't believe
> you will also be taxed or even need to report that same amount and subject
> it to a second taxing.
>
>
In many states the buyer pays the "sales or use tax" on the purchase
cost of the vehicle. That is frequently the amount due after trade-in
allowance. In states that have personal income taxes, the "Seller" pays
taxes on the "profit or net gain" of the sale (he originally bought it
for 15,000, sells it for 20,000, pays income tax on 5,000) Two different
taxing mechanisms. One considered a "user fee" and the other is an
"income tax".

On Sun, 24 Sep 2006 13:27:16 GMT, "Kickstart"
> puked:

>> Don't try that with the '67 435 hp coupe you bought for $40,000 7 years
>> ago and sold just recently for $150,000.
>>
>> I think you will find several get their hands in on your gain.
>>
>>
>> >>>
>>> I don't know PA law, but I am hoping there is enough sense in it
>
>I don't understand why a state would be entitled to any money made on a car.
>If there is a law saying if you make money on a car, the other edge of that
>law would give you a deduction for any money lost when selling a car (?)
>How many people actually make money when they trade in ?
>I think this is a loosing proposition for the state if it is in fact true.
>Now if your business is buying and selling autos the that is different.
>Also any hobby, if not used as a deduction would not qualify as income
>(federally speaking).
>IMHO FWIW
>I really would like to hear more about this supposed PA law, if anyone
>really knows the truth
>
>kickstart
>

Capital Gains.
--
lab~rat >:-)
Do you want polite or do you want sincere?

> I don't know PA law, but I am hoping there is enough sense in it to
> recognize that the State can't tax the buyer and the seller both on the same
> exchange of money/property.

Governments do it all the time. You buy an item at the store, pay a
sales tax, and the business pays a profit tax. Not to mention the 50
times before it made it to the retail store that the item was taxed.

BDragon, wrote the following at or about 9/23/2006 9:36 PM:

> I don't know PA law, but I am hoping there is enough sense in it to
> recognize that the State can't tax the buyer and the seller both on the same
> exchange of money/property. When the buyer transfers the ownership, he will
> pay taxes on the amount he reports as the purchase price. I don't believe
> you will also be taxed or even need to report that same amount and subject
> it to a second taxing.

There's enough sense there that they will get whatever taxes they can.

Probably only going to be ONE tax collected on the direct transaction
but... Think about it a minute. I have a '90 that I "stole" for a mere
$2,000 because the previous owner spilled a cup of coffee on the console
and the tires were dirty<g>

You come along and want to by this pristine '90 with the coffee cleaned
up and a new set of skips on it (actually, I just washed the tires and
put some dressing on them)and pay me $13,000 for this car.

Now, depending on how they assess the tax, the buyer (you) will be
liable for tax on the $13,000 purchase price. This likely will be
categorized as a sales tax.

For my part, even though I am not a dealer, I have realized a profit or
income of $11,000 (less the cost of cleaning up the car and tires for
sale). If PA has an income tax and I'm honest, they will get their bite
of my $11,000 profit as will the feds.

This is probably the exception since most itinerant sales of cars result
in a "loss."

Remember... the subject line has to do with taxable income, not sales tax.

Unquestionably Confused wrote:
> BDragon, wrote the following at or about 9/23/2006 9:36 PM:
>
>> I don't know PA law, but I am hoping there is enough sense in it to
>> recognize that the State can't tax the buyer and the seller both on
>> the same
>> exchange of money/property. When the buyer transfers the ownership,
>> he will
>> pay taxes on the amount he reports as the purchase price. I don't
>> believe
>> you will also be taxed or even need to report that same amount and
>> subject
>> it to a second taxing.
>
> There's enough sense there that they will get whatever taxes they can.
>
> Probably only going to be ONE tax collected on the direct transaction
> but... Think about it a minute. I have a '90 that I "stole" for a mere
> $2,000 because the previous owner spilled a cup of coffee on the console
> and the tires were dirty<g>
>
> You come along and want to by this pristine '90 with the coffee cleaned
> up and a new set of skips on it (actually, I just washed the tires and
> put some dressing on them)and pay me $13,000 for this car.
>
> Now, depending on how they assess the tax, the buyer (you) will be
> liable for tax on the $13,000 purchase price. This likely will be
> categorized as a sales tax.
>
> For my part, even though I am not a dealer, I have realized a profit or
> income of $11,000 (less the cost of cleaning up the car and tires for
> sale). If PA has an income tax and I'm honest, they will get their bite
> of my $11,000 profit as will the feds.
>
> This is probably the exception since most itinerant sales of cars result
> in a "loss."
>
> Remember... the subject line has to do with taxable income, not sales tax.

Brings up another question.

In California, a private party records the selling price on a "report of
sale" that's sent to the DMV within 10 days. This report gets the
seller off the hook for traffic tickets and financial responsibility.
The selling price is checked against the purchase price the buyer
reports to assess the sales tax on the transaction.

What isn't mentioned is whether there is a "sales price history" for
every used car in the state. Anyone know if that data is kept and how
it's used? (i.e. is it reported to the Franchise Tax Board -- the state
income tax folk?)

--
PJ
'89 Hookercar '02 e-blu coupe

In article . com>,
"Larry Bud" > wrote:

> Not to mention the 50
> times before it made it to the retail store that the item was taxed.

Well not quite - the profit each entity realized on the item is taxed,
not the total value of the item each time it changes hands.

Here's waving to ya - \||||

Owen
___

'67BB & '72BB

-- not affiliated with JLA forum in any way -- alt.autos.corvette is
original posting --
___

"To know the world intimately is the beginning of caring."
-- Ann Hayman Zwinger