dslreports logo
site
 
    All Forums Hot Topics Gallery
spc

spacer




how-to block ads


Search Topic:
uniqs
39181
share rss forum feed


cocothebean
You Are My Nightmare
Premium
join:2002-11-16
Carson City, NV

Tax question - gift of a car

My sister-in-law was given a new car from her cousin it is worth $33,000 he paid for it.
Now, does she have to claim it on her income taxes?
I am thinking she does.
Thanks for any replies!!!


thewayitis

join:2005-12-13
usa

You can give a "gift" of money or a car and not pay taxes on it in my state. I had a family member who gave a car as a gift they told the Secretay Of State Office it cost a $1 - May depend on what state she lives in.



alg
Passionately apathetic
Premium
join:2001-04-10
Houston, TX
kudos:3

2 edits

My grandfather did the same thing with my dad when he became too old to drive. Said it was sold for $1.
--
Put an end to apostrophe abuse.


tcope
Premium
join:2003-05-07
Sandy, UT
kudos:2

2 edits
reply to cocothebean

Certainly you can give a gift as others mentioned... but it's also "income" and taxable (in every state I know of and certainly Federal). Hence the reason for declaring it was sold for $1, thereby reducing the amount of taxes owed. An older car would not raise any suspicions and what are the chances of getting audited anyway (????).

Edit: Looks like no taxes are owed to the IRS if the gift is under $11k for that year.



pog4
Premium
join:2004-06-03
Kihei, HI

1 recommendation

reply to cocothebean

Start with the IRS: »www.irs.gov/businesses/small/art···,00.html
»www.irs.gov/businesses/small/art···,00.html

The most important part, IMO, is "The donor is generally responsible for paying the gift tax."
--
My Site



Owlbet
Ignite the Ice
Premium,MVM
join:2002-09-24
Palmer, AK

1 edit
reply to cocothebean

said by cocothebean:

My sister-in-law was given a new car from her cousin it is worth $33,000 he paid for it.
Now, does she have to claim it on her income taxes?
I am thinking she does.
Thanks for any replies!!!

Your sister-in-law is a very lucky woman. For 2007, the federal gift tax exclusion is $12,000. Meaning, the person that gave your sister-in-law the car is liable for paying the taxes on the remaining $21,000 value of the car.

Think about it, what kind of gift is it if the recipient has to pay the taxes on the gift?

And for those of you that know someone that sold or transferred property for $1.00, why? You can give cash and property up to $12,000 without incurring a tax liability.

It's always, always, always best to consult with tax and accounting professionals in matters such as these.

The IRS is a great place to get your answers. Just a brief FAQ on gifting, gift returns, and tax liabilities of same right here: »www.irs.gov/businesses/small/art···,00.html


dvd536
as Mr. Pink as they come
Premium
join:2001-04-27
Phoenix, AZ
kudos:4

said by Owlbet:

said by cocothebean:

My sister-in-law was given a new car from her cousin it is worth $33,000 he paid for it.
Now, does she have to claim it on her income taxes?
I am thinking she does.
Thanks for any replies!!!

Your sister-in-law is a very lucky woman. For 2007, the federal gift tax exclusion is $12,000. Meaning, the person that gave your sister-in-law the car is liable for paying the taxes on the remaining $21,000 value of the car.

Think about it, what kind of gift is it if the recipient has to pay the taxes on the gift?

And for those of you that know someone that sold or transferred property for $1.00, why? You can give cash and property up to $12,000 without incurring a tax liability.

It's always, always, always best to consult with tax and accounting professionals in matters such as these.

The IRS is a great place to get your answers. Just a brief FAQ on gifting, gift returns, and tax liabilities of same right here: »www.irs.gov/businesses/small/art···,00.html
I'd rather just sell it for a dollar and avoid paying taxes on the other 21K after all the money i spent buying the car was taxed. this is double taxation at its best.
--
You can never be too rich, too thin or have too much Bandwidth

sailor
Premium
join:2003-10-21
Long Island
kudos:6

4 edits
reply to cocothebean

Just will add this and use New York for an example:
She's in NY, right?

I give one of my paid for vehicles with a book value of $30k to a cousin.

I give him a bill of sale with necessary details, VIN# , model and make etc.. and for price I put it is a gift. I also sign back of my clear title and give to him.

New York DMV has a form where there is a box to check if car is a gift and not sold and also asked relationship....so I would put down gift to cousin.

Cousin now registers car at DMV in his name to get registration and title and plates and he is now EXEMPT from paying any sales tax on the car as it was received as a gift...

He gets plates, puts them on and now owns car.
Done Deal
Has nothing to do with his tax returns.

And he even avoids paying NY Sales Tax on the car due to it was a gift and not a sale where he paid me $30k for the car. Then he would have to pay sales tax on the $30k to The State of New York.( and that is really double taxation as I had to pay sales tax on the car when I bought it...but that is not what this subject is about )

Here is the form..go down about half way and you will see section to use when giving your car as a gift.

»www.nysdmv.com/forms/dtf802_01.pdf

*****Just want to add this gift form is to be used when a car is actually gifted and not for a way to try and avoid paying sales tax on a real sale..( money was paid for the vehicle ) *****

Your State may vary on gift of a vehicle procedure.



cocothebean
You Are My Nightmare
Premium
join:2002-11-16
Carson City, NV
reply to cocothebean

Thanks everyone!!!
i'll pass this info on to her and wait and see what they do.


thewayitis

join:2005-12-13
usa
reply to cocothebean

Just thought I'd add this.

You can gift $12,000 per person - per year.

If you add a person to your vehicle title the state sees it as a sale and you pay the taxes on book value of that vehicle.