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Started By
Message
Minimize tax on personal car sale?
Posted on 12/3/19 at 6:02 am
Posted on 12/3/19 at 6:02 am
I'm selling a car to an employee. He thinks he will avoid sales tax if I show it as an act of donation. I'm not so sure.
Suggestions?
2014 Chev Equinox, 104k miles.
Suggestions?
2014 Chev Equinox, 104k miles.
Posted on 12/3/19 at 6:35 am to NyCaLa
I doubt it because he still has to register it and there would be a value which creates a basis.
Posted on 12/3/19 at 6:59 am to Mr.Perfect
That's what I thought.
I guess what lots of folks do is understate the sale price to minimize the tax.
Asking for a "friend", of course.
I guess what lots of folks do is understate the sale price to minimize the tax.
Asking for a "friend", of course.
Posted on 12/3/19 at 7:49 am to NyCaLa
not sure about the act of donation. you could say you are selling it for $700 or so because it needs some cosmetic work or similar.
Posted on 12/3/19 at 8:44 am to bayou choupique
quote:
not sure about the act of donation. you could say you are selling it for $700 or so because it needs some cosmetic work or similar.
That's helpful. Got rear-ended in Birmingham 5 weeks ago so I can document accident damage to justify the claimed sale price.
(Never mind that the "friend" I'm asking for already got it repaired.)
Posted on 12/3/19 at 9:30 am to NyCaLa
You do realize, that if you put you sold that car for 500.00 The person will have to pay 50.00 tax on that purchase price.
Most likely they spend more on cigarettes each week.
At least thats my experience in the GREAT STATE OF LOUISIANA
Most likely they spend more on cigarettes each week.
At least thats my experience in the GREAT STATE OF LOUISIANA
Posted on 12/3/19 at 10:33 am to NyCaLa
There are a few things happening here.
If you donate the car to someone, there is no sales tax, because there is no sale. However, the registration costs and renewals will be based on the actual fair market value of the vehicle, which will need to be provided.
But you have a bigger problem, and that is, you can't donate a vehicle from an employer to an employee. The assumption is going to be that the vehicle was transferred as part of his employment, and the FMV is going to be income to him, and both of you are going to owe payroll taxes. Now, you do get a deduction just like any other salary / payroll tax expense.
If you donate the car to someone, there is no sales tax, because there is no sale. However, the registration costs and renewals will be based on the actual fair market value of the vehicle, which will need to be provided.
But you have a bigger problem, and that is, you can't donate a vehicle from an employer to an employee. The assumption is going to be that the vehicle was transferred as part of his employment, and the FMV is going to be income to him, and both of you are going to owe payroll taxes. Now, you do get a deduction just like any other salary / payroll tax expense.
Posted on 12/4/19 at 6:40 am to LSUFanHouston
Agree with this. Just “sell” him the car for $500
Posted on 12/4/19 at 8:13 am to crazycubes
Any used vehicle sale can minimize the tax by selling it for $50 or $100. I once sold a used Honda for $ 2K , but in reality, I sold the car for $50 and the key for $1950. Wink Wink. It ain't rocket surgery.
Posted on 12/5/19 at 7:10 pm to NyCaLa
You can donate it, but OMV generally waives sales tax on the value only if the donation is to an immediate family member. Otherwise, they will likely call it a disguised sale and impose sales tax on the market value of the vehuicle.
Same thing can happen if you low ball the price in a bill of sale. If you get too greedy, they may call BS and impose sales tax on the book value.
Donation form -requiring statement of relationship between parties
Summary of donation rules
Same thing can happen if you low ball the price in a bill of sale. If you get too greedy, they may call BS and impose sales tax on the book value.
Donation form -requiring statement of relationship between parties
Summary of donation rules
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