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NyCaLa
LSU Fan
Baton Rouge
Member since Apr 2014
679 posts

Minimize tax on personal car sale?
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.


Mr.Perfect
LSU Fan
Louisiana
Member since Mar 2013
16819 posts

re: Minimize tax on personal car sale?
I doubt it because he still has to register it and there would be a value which creates a basis.


NyCaLa
LSU Fan
Baton Rouge
Member since Apr 2014
679 posts

re: Minimize tax on personal car sale?
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.


bayou choupique
LSU Fan
the banks of bayou choupique
Member since Oct 2014
1260 posts

re: Minimize tax on personal car sale?
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.


NyCaLa
LSU Fan
Baton Rouge
Member since Apr 2014
679 posts

re: Minimize tax on personal car sale?
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.)


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CarlBrutananadilews
Member since Oct 2019
139 posts

re: Minimize tax on personal car sale?
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


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LSUFanHouston
LSU Fan
NOLA
Member since Jul 2009
18315 posts

re: Minimize tax on personal car sale?
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.


crazycubes
Member since Jan 2016
4980 posts

re: Minimize tax on personal car sale?
Agree with this. Just “sell” him the car for $500


randybobandy
BYU Fan
NOLA
Member since Mar 2015
1477 posts

re: Minimize tax on personal car sale?
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.


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Twenty 49
LSU Fan
Shreveport
Member since Jun 2014
12152 posts

re: Minimize tax on personal car sale?
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


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