I bought a Stage 1 many many years ago, so now that its worth much more then I ever imagined, then if I sell it, I think I am required to pay capital gains tax, now at 15% but Obama wants to raise it to 28%! So does anyone know how to get away without paying the capital gains tax, I live in NY thanks Nick
I have never thought about it. I have never reported the sale of a car as income, but I never sold a GSX either.
I don't have a GSX. Its a 70 Stage 1 convertible, red with white top and interior, just had it professionaly appraised for 56K, and he said the market was down this year....It does not have the original block but everything else that makes the car a stage 1 is there, correct valves, distributor, carb, trans and rear end. I have owned this car for 23 years...:blast:
my bad. Too bad they don't adjust the dollar for inflation. That would take care of a lot of capitol gains. I don't know on your car, but more often than not when a house goes up in value after 20 years, that's simply what the dollar buys today. More inflation than increased value. I know the car has increased, but if you look at what it sold for new and compare that to what a high performance car costs today, combine that with restoration costs and you would be in a much better position. Too bad they don't see it that way.
Gerry: Lets say you sold your classic car for 40K. And you went to put the money in the bank, do you think that someone, either the bank or the Government will want to know where you got the money. A friend of mine has been tweaking me on this issue cause I told him I might sell my car
I talked to an accountant friend this spring when, for the first time ever, I did not do my own taxes. I asked him this very question. He told me to form an LLC and incorporate as a racing business. Then transfer ownership of the car to the LLC. He said the car would only need to be raced once per season for three or four seasons. And as long as you keep documentation proving it had been to the track, the car could be considered a company asset. The fact that the car is no longer considered a collectable asset, erases the reporting requirement as a capital gain upon sale. Or you could just not report it, but don't leave a paper trail.
Great answer jim, in 23 years I have only taken it to the strip twice, the last time the told me if I come back to have a roll cage in the car!...YEA RIGHT! So I don't plan on racing it any more, I guess I would have to sell and insist the buyer pay me case, then a little at a time, put it in the bank. You really have had your share of GS's Thanks Nick
It's not like the state or US govt has a blue-book value for your car. Plus, under-reporting the value of vehicles sold is in the Bill of Rights somewhere. So uh, sell it for $100, wink, wink, nudge, nudge. -- Steve
Not so sure about that. An LLC passes its income through to its owner. Sure, if you incorporate and contribute the asset then do as suggested you may have expenses and depreciation that benefit you. BUT, when you sell the asset, now you have something that you sell for more than it is on the books for - and that generates the income that passes through to you - for which you pay taxes. Oh, and I think banks are required to report deposits greater than $10k from a single source.
I know when I've bought old cars and motorcycles I always have a special bill of sale made out for like $200 so I can avoid sales tax at the DMV. :laugh:
I think what this does is remove the car from collectable status in the eyes of the IRS. You don't have to depreciate the car as a business asset, and when you sell it you will have to pay taxes on ordinary business income, but not on capital gains. The next time I talk to my CPA friend, I'll ask him to clarify.
You can write off the storage, restoration, insurance costs, and the original price off of the gain. Don't forget the labor you put into it too, this will help with the tax blow. Another way is to sell the car and then sell the guy a bunch of used parts seperatly. In Canada we don't have this problem, only the purchaser has to pay the sales tax (7%).
I would sell it and just not report the income. There are a lot of bad people in this world who have no visible income and have loads of cash and they get by. To tell you the truth, I never would have thought about capitol gains. Maybe you need to re invest the profit in another car!
Don't be too sure, anything over 5K (I think it used to be 10K) into a bank account tosses up a red flag and may be looked at by the government (due to drug dealers etc making large deposits so they say). Technically anything you make profit from (including interest) is taxable income. Must be BC sales tax?
You cant claim the loss on a car so why would you be taxed on the gain? You're not a dealer are you? If you are then yes, you'd owe taxes on the profit, but as for an individual selling a car It just doesn't sound right.
You know this bothers me! I did a full frame off restoration on my 68 Corvette and the car was bought for $2,000.00 and now is around the $28000.00 range, so what's my point? I spent a lot on parts, paint, and my time (lots of that!) and if I sold it, should I pay a gains tax? I figured I would have had over $100,000.00 if I paid my self so would I be getting a tax credit? I think you get my point here, AL.
