"Forced" to trade

[ChuckA]

If you sell a car for more than you paid for it, you incurred a profit which is treated as a capital gain to the IRS (and subsequently to most states), so this is reflected in income tax filings... Most of us never see this situation, but OP may have had a sought after 'vette.

Technically correct, but does anyone declare the gain from the casual sale of a vehicle? I wonder how the dealer would handle if the trade-in was greater value then the replacement vehicle purchased. I assume sales tax would be $0 but are they required to issue a 1099?

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[NY_Cade69]

Interesting concept, since dealers already buy cars from people, as a direct purchase, they probably already have the means to handle it.

It's all recorded on the sale/transfer documents - in Connecticutt = CT DMV H-31
which is shared (along with all the other title info) with the US DOJ NMVTIS and other agencies...

If the gov't thought they could go after $600 in sales on eBay, you think they are not watching this as well?

 

[KennyMc]

Has anyone posted the actual stipulation that says a seller pays a sales tax on the amount of the sale?

 

[NY_Cade69]

Has anyone posted the actual stipulation that says a seller pays a sales tax on the amount of the sale?

No such thing...They do, however, need to file and remit any sales tax collected from customer sales...

 

[shutterbug]

If you sell a car for more than you paid for it, you incurred a profit which is treated as a capital gain to the IRS (and subsequently to most states), so this is reflected in income tax filings... Most of us never see this situation, but OP may have had a sought after 'vette.

That's what I thought and said, but OP claims that CT charges the seller tax.

 

[ralteredstates]

That's what I thought and said, but OP claims that CT charges the seller tax.

I lead you astray. I loose the tax break if I sell it outright (buyer must pay sales tax). When traded in, the tax payed is less because it's based on the final purchase price. I would have lost over $7000 if I sold it outright. Trading it in was financially better.

 

[NY_Cade69]

I lead you astray. I loose the tax break if I sell it outright (buyer must pay sales tax). When traded in, the tax payed is less because it's based on the final purchase price. I would have lost over $7000 if I sold it outright. Trading it in was financially better.

Everybody rails on CT taxes, but that would have taken the cake!

 

[KennyMc]

No such thing...They do, however, need to file and remit any sales tax collected from customer sales...

Remitting sales tax collected is different than paying a sales tax on something you sold. That boggles the mind. I would like to see that statute/tax code/etc. that stipulates that.

 

[NY_Cade69]

Remitting sales tax collected is different than paying a sales tax on something you sold. That boggles the mind. I would like to see that statute/tax code/etc. that stipulates that.

Not to worry, OP recanted.

I lead you astray. I loose the tax break if I sell it outright (buyer must pay sales tax). When traded in, the tax payed is less because it's based on the final purchase price. I would have lost over $7000 if I sold it outright. Trading it in was financially better.

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