EV tax credit counting toward capital gains?

[Mach1E]

I agree that persons should seek tax advice outside of the forum but the tax code is unreadable. As a retired accountant with 48 years experience I would myself not report it.

At worst the gain is a like-kind exchange and gain is rolled into the basis of the replacement car.

This is what happens when you retire……. They change the laws.

No like kind exchanges on automobiles after 2018. But that was for “business use” anyways and wouldn’t apply to the OP.

“Under the old law you could exchange a building for another building or exchange a vehicle for another vehicle (assuming all property is business-use or investment-use property). Under the TCJA, only real estate exchanges are eligible to take advantage of the like-kind exchange rules.”

https://www.jmco.com/articles/real-estate/like-kind-exchanges-under-tcja-2018/

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[woody]

Purchasers pay taxes (eg sales taxes) on purchases. Businesses selling things have business licenses, sales tax licenses, etc.
Private individual sales of used items do not involve taxes. Private sales (almost always) do not involve selling for profit.
Businesses buying/selling things, like used cars, for profit collect sales taxes and pay income taxes on profit.
Countless private sales of used vehicles and other items yearly. Doubt any private sale from individual to individual has sales taxes collected or sale reported as income.
Also doubt that any government agency would even consider trying to track these unrecorded private transactions.
A tax credit is just that- a credit. Doubt that the government is a revoker(better terms no longer permitted) when it comes to tax credits.

 

[kennethjk]

I agree that persons should seek tax advice outside of the forum but the tax code is unreadable.

As a retired accountant with 48 years experience I would myself not report it.

Not only is it sometimes unreadable many times it’s not logical.

I am also a retired accountable with 45 years of experience. Most people probably wouldn’t report it, doesn’t make it right.

my personal opinion is that if people did the right thing, everyone’s taxes would be lower, I know most people feel the government would just waste the money

but yes you are right people should seek appropriate tax advice from a professional.

 

[RickMachE]

I agree that persons should seek tax advice outside of the forum but the tax code is unreadable.

As a retired accountant with 48 years experience I would myself not report it.

Not only is it sometimes unreadable many times it’s not logical.

I am also a retired accountable with 45 years of experience. Most people probably wouldn’t report it, doesn’t make it right.

my personal opinion is that if people did the right thing, everyone’s taxes would be lower, I know most people feel the government would just waste the money

but yes you are right people should seek appropriate tax advice from a professional.

That a gain on selling a vehicle is a capital gain is correct.
Whether the tax credit reduces the cost basis and increases the gain is the only uncertainty.

 

[kennethjk]

This is what happens when you retire……. They change the laws.

No like kind exchanges on automobiles after 2018. But that was for “business use” anyways and wouldn’t apply to the OP.

“Under the old law you could exchange a building for another building or exchange a vehicle for another vehicle (assuming all property is business-use or investment-use property). Under the TCJA, only real estate exchanges are eligible to take advantage of the like-kind exchange rules.”

https://www.jmco.com/articles/real-estate/like-kind-exchanges-under-tcja-2018/

That’s why I don’t give tax advice anymore and recommend reading new laws as they do change all the time.

 

[kennethjk]

That a gain on selling a vehicle is a capital gain is correct.
Whether the tax credit reduces the cost basis and increases the gain is the only uncertainty.

In this case I don’t think there is uncertainty, my opinion but people will do what they do.

full disclosure , I do not stay up to date on everything, especially this, so people should consult professionals but many people do their own returns and don’t want to or have the means to spend hundreds of dollars to get the right answer.

it’s a shame things aren’t more clear on many tax issues. The IRS has publications that can be very helpful but not on everything.

also when I say read the code, make sure it’s the code applicable to when your transaction happened, not after the law changed. Not that easy when you don’t have access To the proper services.

 

[Mach1E]

Purchasers pay taxes (eg sales taxes) on purchases. Businesses selling things have business licenses, sales tax licenses, etc.
Private individual sales of used items do not involve taxes. Private sales (almost always) do not involve selling for profit.
Businesses buying/selling things, like used cars, for profit collect sales taxes and pay income taxes on profit.
Countless private sales of used vehicles and other items yearly. Doubt any private sale from individual to individual has sales taxes collected or sale reported as income.
Also doubt that any government agency would even consider trying to track these unrecorded private transactions.
A tax credit is just that- a credit. Doubt that the government is a revoker(better terms no longer permitted) when it comes to tax credits.

Not sure how it works in other states, but in Florida they collect sales tax on private sales when you register the vehicle.

The transactions are recorded at our DMV.

And the government agency that checks all this stuff? The IRS.

The entire tax system is the “honor system….” until you get AUDITED!

 

[Mach1E]

That a gain on selling a vehicle is a capital gain is correct.
Whether the tax credit reduces the cost basis and increases the gain is the only uncertainty.

See post #7. It does.

 

[Shelbeast]

Why is Turbo Tax taking so long to upload 2022 form for EV tax benefit? Did they have it up for 2021?

 

[Mach1E]

Why is Turbo Tax taking so long to upload 2022 form for EV tax benefit? Did they have it up for 2021?

Probably because the rules changed.

Different set of rules started on Aug 2022. IRS guidance didn’t come out until Jan 2023 (list of qualifying cars).

 

[Shelbeast]

Probably because the rules changed.

Different set of rules started on Aug 2022. IRS guidance didn’t come out until Jan 2023 (list of qualifying cars).

Can you share the new rules? Sorry if missed them on another post.

 

[dmastro]

There is typically so much misinformation on the forums, but well done MachEForum, you've outdone yourselves here.

 

[kennethjk]

Why is Turbo Tax taking so long to upload 2022 form for EV tax benefit? Did they have it up for 2021?

Many forms are not available at the beginning of tax season. Happens all the time.

just takes time after new law changes.

 

[Shelbeast]

Many forms are not available at the beginning of tax season. Happens all the time.

just takes time after new law changes.

I'm confused. The Tax laws for 2022 were known in early 2022 for 2022 (the whole if you buy in his quarter, you get the benefit) You're saying after being told the laws in early 2022, they are going to change in 2023 (retro 2022)?

 

[kennethjk]

I'm confused. The Tax laws for 2022 were known in early 2022 for 2022. You're saying after being told the laws in early 2022, the are going to change in 2023?

Since the new law was effective in august there may be nuances that need to change on the form.

In the past, tax rates for example of capital gains changed in mid year, so gains before a certain date were taxed at one rate and gains after a certain date changed to another rate.

forms need to change based on law changes and in this case we know the law changed mid year. So the form may have to reflect that.

also tax software companies have to submit their versions to the IRS to get them approved. Many times forms are just not available by the software companies this early.

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