Is this a loophole option? | TigerDroppings.com

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LSUengineer'12
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The Best Side
Member since Dec 2011
708 posts

Is this a loophole option?


Selling my truck personally. The buyer gave me cash. I read you can't do an act of donation unless you're directly related to the buyer (in order to avoid taxes). Can we do a bill of sale for like $100 to avoid the taxes of the real price ($5,000)?






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Golfer
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Coral Bay, St. John, USVI
Member since Nov 2005
56049 posts

re: Is this a loophole option?


No. Taxes are paid on NADA value.





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LSUengineer'12
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Member since Dec 2011
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re: Is this a loophole option?


So when they go to the DMV to pay taxes, the DMV will look up NADA value, and charge them taxes based on that amount?

So for their sake, no way to avoid taxes other than an act of donation which can't be done?




This post was edited on 10/1 at 11:14 am


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Broke
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AKA Buttercup
Member since Sep 2006
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re: Is this a loophole option?


I did an act of donation to some dude I didn't know. Nothing ever happened.





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LSUengineer'12
LSU Fan
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Member since Dec 2011
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re: Is this a loophole option?


Yeah, I guess they can't prove if we're related or not.

Can an act of donation be done directly at a Notary?



This post was edited on 10/1 at 11:16 am


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Ranger198
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Member since Oct 2012
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re: Is this a loophole option?


At a notary





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HeadyMurphey
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re: Is this a loophole option?


Since when? It hasn't always been like that





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Broke
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AKA Buttercup
Member since Sep 2006
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re: Is this a loophole option?


quote:

Yeah, I guess they can't prove if we're related or not.

Can an act of donation be done directly at a Notary?



Yes. Also, we were doing a swap. One vehicle for the other. Straight swap. So I don't know if that comes into play with taxes or not.






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SpidermanTUba
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Member since May 2004
27265 posts

re: Is this a loophole option?


quote:


Selling my truck personally. The buyer gave me cash. I read you can't do an act of donation unless you're directly related to the buyer (in order to avoid taxes). Can we do a bill of sale for like $100 to avoid the taxes of the real price ($5,000)?


If you want to break the law and cheat your fellow citizen, then yes.






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yellowfin
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re: Is this a loophole option?


I wouldn't put $100 but you could get away with a lot less than the actual price





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LSUengineer'12
LSU Fan
The Best Side
Member since Dec 2011
708 posts

re: Is this a loophole option?


quote:

wouldn't put $100 but you could get away with a lot less than the actual price


Well apparently it doesn't matter what the price is on the Bill of Sale if they tax based on the NADA value..

Which I'm not sure if that's entirely correct.



This post was edited on 10/1 at 12:53 pm


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HeadyMurphey
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re: Is this a loophole option?


quote:

Which I'm not sure if that's entirely correct.


It certainly wasn't 17 years ago, but that was 17 years ago






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Golfer
LSU Fan
Coral Bay, St. John, USVI
Member since Nov 2005
56049 posts

re: Is this a loophole option?


quote:

Well apparently it doesn't matter what the price is on the Bill of Sale if they tax based on the NADA value..

Which I'm not sure if that's entirely correct.


I "bought" my college car from my Dad (Alabama Resident) to register in Louisiana after graduation. In Alabama, there isn't an act of donation so you just transfer the vehicle for $1.00 or some nominal value between family.

I did this, brought it to the DMV and they attempted to tax me on the NADA value of the vehicle ($7,000). That's when I found out about the act of donation.







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GreenTrout
LSU Fan
Toledo Bend
Member since Jul 2013
725 posts

re: Is this a loophole option?


quote:

No. Taxes are paid on NADA value.


Incorrect. The DMV States that:

quote:

Motor vehicle sales tax applies to both motorized and non-motorized property subject to the Vehicle Registration License Tax Law of the State of Louisiana. Motor vehicles include, but are not limited to, automobiles, trucks, motorcycles, motor homes, mobile homes, trailers (boat and utility), campers, and off-road vehicles. In addition to the 4 percent state sales tax, most parishes and many municipalities have a local sales tax ranging from 1 percent to 5.5 percent. The rate of tax is based upon the domicile of the purchaser, not the location of
the seller.



This post was edited on 10/1 at 1:45 pm


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GreenTrout
LSU Fan
Toledo Bend
Member since Jul 2013
725 posts

re: Is this a loophole option?


Your situation is not quite like the OP.

quote:

In Alabama, there isn't an act of donation


First, since the car was not donated to you then the state assumed that you purchased it. It's illogical for the state to believe that you paid $1 for a car, and in which case they went an additional step.






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Golfer
LSU Fan
Coral Bay, St. John, USVI
Member since Nov 2005
56049 posts

re: Is this a loophole option?


quote:

Incorrect. The DMV states that:


None of what you copied has anything to do with determining the value of the vehicle.






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Golfer
LSU Fan
Coral Bay, St. John, USVI
Member since Nov 2005
56049 posts

re: Is this a loophole option?


quote:

First, since the car was not donated to you then the state assumed that you purchased it. It's illogical for the state to believe that you paid $1 for a car, and in which case they went an additional step.



The car ended up being donated to me. And again the same situation happened when I bought a truck private party. I delivered the bill of sale for $14,000 to the DMV and I watched the DMV clerk look up the NADA value to determine the appropriate value to tax the vehicle at.






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GreenTrout
LSU Fan
Toledo Bend
Member since Jul 2013
725 posts

re: Is this a loophole option?


DMV must hate you, because they've never looked up NADA on anything I've brought. Nor can I find any publication stating that to be the offical policy on determing the tax base.





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Golfer
LSU Fan
Coral Bay, St. John, USVI
Member since Nov 2005
56049 posts

re: Is this a loophole option?


They will use the sales price, but review to determine FMV (with NADA).

quote:

The Office of Motor Vehicles will collect sales/use tax on all transfers of new and used motor vehicles based on the selling price as shown on the notarized bill of sale or invoice. Louisiana state tax is 4%. Your parish and municipality tax may be determined by accessing the Parish and Municipality Tax Table. The total tax charged will include state, parish and municipality if applicable.
Sales/use tax can be assessed on an amount lower than the fair market value if the vehicle has sustained major mechanical or body damage. Documentation regarding this must be presented along with the file.

If a vehicle is purchased through a dealer, the sales tax is based on the total selling price, including any shipping or dealer prep fees less the trade-in (trade-in must be in seller's name and registered in Louisiana) or rebates, if any.

Upon moving to Louisiana new residents must register their vehicles immediately and are subject to the payment of a use tax based on the fair market value. A maximum of 4% credit may be allowed for a similar tax paid in another state against taxes due in Louisiana provided Louisiana has a reciprocal agreement with that state. Proof of payment of tax may be required.

Active duty military personnel entering Louisiana may register and title their vehicle without payment of sales/use tax. Proof must be furnished that sales tax was paid in another state, along with a copy of their military identification.






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GreenTrout
LSU Fan
Toledo Bend
Member since Jul 2013
725 posts

re: Is this a loophole option?


From DPS

quote:

Louisiana law requires vehicles imported to this state for use upon the highways of Louisiana to be registered.These vehicles will be subject to a road use tax upon registration. Road use tax due is based upon loan value of the vehicle listed in the NADA Official Used Car Guide book, or average trade-in listed on the electronic (internet) NADA.





This post was edited on 10/1 at 2:05 pm


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