Tax Implications for Selling your D90 - Defender Source
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  #1  
Old January 3rd, 2016, 12:16 AM
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Jesse Hardin
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Tax Implications for Selling your D90

Someone please school me in the tax considerations for selling your D90. I have read different websites and seem to be finding conflicting info (imagine that). Is a Defender a collectible asset?
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  #2  
Old January 3rd, 2016, 12:44 AM
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I am talking purely from an aesthetics standpoint.
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  #3  
Old January 3rd, 2016, 04:43 AM
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If w2 filing people could take depreciation as a tax write off on their 1040's Be the biggest incentive to buy a new car.
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  #4  
Old January 3rd, 2016, 09:28 AM
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I think you want to know if it is a Capital Asset, right?

Outside of the special rules re classic cars which determines the gain rate you pay, the IRS considers all personal cars capital assets. I don't feel like a NAS has met the typical classic car status yet.

A row could be argued differently IMO.

So, in short, IMO gains on a NAS will be taxable as capital gain and the gain rate will depend on your holding period and tax bracket just like other capital assets you might sell.
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  #5  
Old January 3rd, 2016, 10:08 AM
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Take cash...lol
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  #6  
Old January 3rd, 2016, 10:18 AM
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Is there such thing as a gain on these things, lol? I'd have to sell mine for over $60k to make a penny on it!
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Old January 3rd, 2016, 11:04 AM
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I'm assuming then you can factor all the maintenance and upkeep to determine your basis. Is that correct? What about things like insurance and registration?
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Old January 3rd, 2016, 11:07 AM
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Listen to Clay (1of40) - he knows what he is talking about...considering what he does for a living
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Old January 3rd, 2016, 11:25 AM
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Quote:
Originally Posted by hunterjah View Post
I'm assuming then you can factor all the maintenance and upkeep to determine your basis. Is that correct? What about things like insurance and registration?
General maintenance and upkeep I don't think would increase your tax basis if the vehicle is for personal use. If you how've swapped in a different engine, as an example, that would be IMO. I think the safe way to think about it is like a house. Maid service and painting is not likely to increase your basis in the house but a new AC/furnace should.

Thank for the vote of confidence Jonesy. Hopefully if there is anyone that practices individual income tax for a living spots something wrong or misleading will pipe in. I base my opinions on my corporate tax experience which is similar but can be different sometimes.
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Old January 3rd, 2016, 12:01 PM
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Who here reported catalog and online purchases to calculate use tax on state income tax forms over the last few decades? Assuming 99.9% did not. Ditto for folks turning cars for side income at volumes below the triggers requiring dealer status.
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Old January 3rd, 2016, 01:14 PM
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Originally Posted by down_shift View Post
Who here reported catalog and online purchases to calculate use tax on state income tax forms over the last few decades? Assuming 99.9% did not. Ditto for folks turning cars for side income at volumes below the triggers requiring dealer status.
Especially if you are one of the .02% that are selected for audit. Come to think of it; anyone know of anyone under audit? I haven't heard of anyone being audited in over 20 years. Corporate audits are up but the only those with heavy transfer pricing issues that I know of. There is a huge deficit in trained and seasoned auditors left.
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Old January 3rd, 2016, 01:23 PM
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Originally Posted by 1of40 View Post
Especially if you are one of the .02% that are selected for audit. Come to think of it; anyone know of anyone under audit? I haven't heard of anyone being audited in over 20 years. Corporate audits are up but the only those with heavy transfer pricing issues that I know of. There is a huge deficit in trained and seasoned auditors left.
I have a friend who JUST got a notice of audit for her 2013 return - she went on sabbatical from a higher ed admin gig and did a fellowship.
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  #13  
Old January 3rd, 2016, 02:03 PM
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Originally Posted by 1of40 View Post
Especially if you are one of the .02% that are selected for audit. Come to think of it; anyone know of anyone under audit? I haven't heard of anyone being audited in over 20 years. Corporate audits are up but the only those with heavy transfer pricing issues that I know of. There is a huge deficit in trained and seasoned auditors left.
- they nailed my arse in 2014 (2013 tax yr) - no fun at all.
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  #14  
Old January 3rd, 2016, 04:44 PM
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Clay I'm pretty sure your correct. Sell price less basis with only improvements increasing your basis. Most cars don't appreciate so you never see the gain on a personal vehicle. Can't take the loss
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  #15  
Old January 4th, 2016, 12:45 AM
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The general formula: Basis-sales price=capital gain (loss).

Vehicles are considered personal use assets; however they are also capital assets because they don't fit IRC's definition of not capital assets. Still following me?

Basis is sales price + anything used to put the asset in service including delivery and installation. Capital improvements also increase basis. Capital improvements are things that either improve the useful life of an asset or increases the value of that asset. Repairs and maintenance do not count towards this.

The reality: most personal use assets aren't subjected to the rules of capital assets because most personal use assets don't appreciate in value. There are special rules for "first-time" home buyers (another definition in itself not necessary for this discussion) and a special capital gains rate for collectibles. Cars don't fall in the IRC's category of collectibles. Also, since cars are personal use assets, their losses can't be written off or used to offset capital gains. That freebie only applies to company capital assets. I'm not getting into depreciation or recapture. Given the nature of most vehicles, most people don't know this or care too much.

Bottom line: Purchase price-sales price=capital gain. If you had your D90 for more than a year and a day and it appreciated, you'll pay the long-term capital gain rate on the profit.

Source: BBA in accounting, 2 busy seasons in tax, not yet passed the CFP® Exam, future CPA. But always ask a tax pro about your situation.
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  #16  
Old January 4th, 2016, 01:13 AM
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To answer your question, it's collectible if it's an antique. It's antique when your state says it's an antique. If we're talking about your 97 NAS, probably not unless you get it appraised as a collectibl.
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