GT52

capital gains taxes on old cars

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If your car has "collector car" plates like YOM or permanent antique then it's sort of an open window to being a collectible asset. I tag my old cars like regular old drivers. This has less to do with the actual topic and more to do with the cop who has a wire hair up his hiney and wants to hassle a driver for not going to a "meet". The gift thing, as I understand it, a person is entitled to a tax free gift once in their adult life. I could gift my daughter a $100K car and it's tax free, just as if i gifted $100K in cash. Brain food, maybe...?

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If your car has "collector car" plates like YOM or permanent antique then it's sort of an open window to being a collectible asset. I tag my old cars like regular old drivers...The gift thing, as I understand it, a person is entitled to a tax free gift once in their adult life. I could gift my daughter a $100K car and it's tax free, just as if i gifted $100K in cash...

LOL, one of the "professional" opinions that I got over the years was that if the car didn't have "antique" plates on it then it wasn't an antique, or a collectible. I seriously doubt that that opinion would wash in an IRS audit, but who knows what some low level employee at the IRS might use in making a judgment. I'd sure hate to have to argue that one in a court though.

"Gifting" beyond the $10K/year/person (I think that's still the limit) is a bit more complicated than you describe, and a gift of $100K, cash or car, would certainly have to be declared, and then be counted in the future against the limits which govern the taxing of estates. I don't pretend to know a lot about estate taxes, but one thing you can't do is make a mad rush to give things away in order to avoid the estate taxes. With the dollar threshold for taxing estates that exists today, most people's estates will not be taxable anyway, so no need to give things away. I'd still seek professional advice if you're planning on passing your car on through your estate. Fortunately, the rules for that are pretty clear compared to the rules on capital gains being either "ordinary" or "collectible", which is my problem.

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very simple-you sell the car for cash and owe nothing-no trace whatsoever................................... or even a like kind swap, but prey tell, why the paper trail?

it is often reported at auctions that a car such as a Ferrari has set a new world record at 27 million or so- do you all believe that that is the highest sum ever acheived in a sale? why many sales are private and #'s have been achieved that are far greater.................

finally, if leaving it to someone in an estate- best possible solution is to buy insurance to cover the estate gains and have a wash.

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I wonder if I licensed and insured a collector vehicle as an everyday driver instead of a collector vehicle, if that would qualify as proof of it as a non-collectable.

Edited by Larry W (see edit history)

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I wonder if I licensed and insured a vehicle as an everyday driver instead of a collector vehicle, if that would qualify as proof of it as a non-collectable.

I have cars with everyday driver plates. and antiques plates..

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I wonder if I licensed and insured a vehicle as an everyday driver instead of a collector vehicle, if that would qualify as proof of it as a non-collectable.

You know, it seems simplistic, but as I said earlier in the thread I was actually told by a CPA that if a car didn't have antique plates on it then it wasn't an antique. I'd caution that that is definitely not the majority opinion. I also seriously doubt that argument would carry the day if push comes to shove with the IRS, but with a cursory review by a low-level employee at the IRS, maybe. It certainly can't hurt your position. I'm pretty sure that taking that position, along with the fact that "experts" disagree, would keep you from having to pay any penalty, if you file claiming the 15% rate and the IRS later decides that you owe the 28% rate...you'd still be stuck paying the extra tax, and probably interest, but no penalty. All the information I've been able to collect over the years leads me to believe that the best course of action for most folks is to claim the 15% rate and put the burden on the IRS to change it to 28%. Unfortunately that doesn't help me decide what I'm trying to decide. Where you're likely to get into trouble with a high dollar sale is conveniently forgetting that you sold the car, or taking steps that clearly indicate that you were trying to hide it. If a CPA recommends you do that, I'd find another CPA.

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Mr. GT52, have you contacted the AACA national office

in Hershey, Pa.? Perhaps Steve Moskowitz (Exec. Dir.)

can put you in touch with more knowledgeable people

in the club who have actual experience.

I see some of the opinions in this forum (mine too?)

have not been based on knowledge of your specific subject.

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Mr. GT52, have you contacted the AACA national office

in Hershey, Pa.? Perhaps Steve Moskowitz (Exec. Dir.)

can put you in touch with more knowledgeable people

in the club who have actual experience...

QUOTE]

I haven't, but that might be a good idea. I'm not sure how much they're in to answering individual questions, but it seems like a topic that might make a good article for the magazine if someone had knowledge on the subject. I wonder if the AACA could use their name recognition to get an answer out of the IRS...

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Current valuation established in probate. Probate only happens if you do not have a will or trust...

Will cost 350.00 Probate cost 8500 to 12K.

Not necessarily, and likely much more expensive than you think:

The cost of your will is only the entry fee. Wills are the "guidelines" for PROBATE. A will typically must be probated, at which time the lawyer and related expenses could be anywhere from a flat fee, to as much as half of the estate; and in Louisiana assets are probated twice - once on the death of the first spouse, and again on the death of the surviving spouse.

Revocable and/or Irrevocable Living Trust; Family Trust; Childrens Trust are just some of the financial tools which should be considered. I these cases the assets are donated from the individual to the trust which is then controlled by either husband and/or wife as Joint Trustees with the surviving spouse maintaining control as Trustee (and in Louisiana - not requiring probate/succession). Other individuals, such as children can be named as successor trustee. This means that assets can be passed from one generation to the next without excessive legal expense and court interference - but exercise caution in having these created properly - DO NOT just go on-line and try to "do it yourself"!

Edited by Marty Roth (see edit history)

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Marty in a trust or other forms you will need :

Power of attorney

Medical power of attorney

Financial power of attorney

Agent

Hipaa forms need to filled out..

Also look into this :

http://www.forbes.com/sites/advisor/2011/06/28/7-mistakes-with-stretch-iras/

The stretch IRA, when implemented properly, can be one of the great vehicles for transferring wealth to your heirs, maintaining the tax-deferred status of the bulk of your account until much later.

Edited by nick8086 (see edit history)

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Mr. GT52, the AACA national office would be happy

to assist its members! They are there to serve.

I don't know that they themselves would have the

answer to your question, but Steve M. could

likely put you in touch with some other experienced

collectors who could discuss their own experiences.

AACA has members from billionaires to dogcatchers,

and among them, someone has surely been in the same

boat as you!

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One point and one question.   Do not trust your CPA.  90% of them will have you pay the higher "collectible" rate because they don't know any better.

 

Question:   I'm assuming if you trade a single car for 2 other cars with no cash your basis transfers proportionally.    So,  if I have a 50% paper gain on the single car,  when I get back the 2 cars my basis is 50% of the value on each of the new cars.   There is no tax owed until you sell one or both of the cars you took in trade.

 

Would anybody like to comment on that?   I think I'm right and my accountant is saying otherwise (see my first point).

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I think I went over this with my accountant before as well.  As long as it's like property,  there is no tax,  until you turn it into cash or cross the like property into something different.  Keep it all into cars or trucks and you are fine,  turn it into construction equipment or property and then you have to pay the tax.  I tired swapping one of my cars value wise for an excavator and she didn't like that. 

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auburn,

you are def correct on the like kind exchange.

I would disagree with your cpa and the excavator. It too can be a like kind exchange. you take your excavator to shows, dont you?  ;)

 

If you dont, you should.

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6 hours ago, mercer09 said:

auburn,

you are def correct on the like kind exchange.

I would disagree with your cpa and the excavator. It too can be a like kind exchange. you take your excavator to shows, dont you?  ;)

 

If you dont, you should.

Of course that would necessitate a bigger truck and trailer to show it as well.  

I think you are on to something. Quite a few years to go before it can be HPOF.   Still has 98 percent original paint. 

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On ‎12‎/‎1‎/‎2014 at 3:04 PM, GT52 said:

Instead of having a root canal, I’ve been doing some “estate planning” to make myself miserable. I’m hoping that someone here has had some experience in “capital gains” when selling a collector car.

 

The advice my accountant gave me is "declare every cent you make and take every write-off you can. Tax avoidance is your right, Tax Evasion is a crime."  Capitol gains is reportable with any property that you sell for a profit and collector cars are no different, but they are bigger than a bread box and they don't stack and store while you wait for them to hatch. A good sharp pencil and you figure out everything it took to create, maintain, even store the car, down to the percentage of utilities and property tax per sq. ft. of space over the period of years. By the time you deduct every paper towel and drop of glass cleaner used to keep this "collectible" in the kind of condition necessary to create the impression of profit, you might just document a capitol loss. 

 

When it comes to estate planning, the larger the estate, the more documentation it takes and a Living Revocable Trust, when properly and carefully funded can be a tremendous instrument.

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15 hours ago, alsancle said:

One point and one question.   Do not trust your CPA.  90% of them will have you pay the higher "collectible" rate because they don't know any better.

 

Question:   I'm assuming if you trade a single car for 2 other cars with no cash your basis transfers proportionally.    So,  if I have a 50% paper gain on the single car,  when I get back the 2 cars my basis is 50% of the value on each of the new cars.   There is no tax owed until you sell one or both of the cars you took in trade.

 

Would anybody like to comment on that?   I think I'm right and my accountant is saying otherwise (see my first point).

as a cpa I take that's as insult to my profession

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If you make 165K or more in  a year? I think you pay more on the long term gains. 

 

2018 had a lot of tax changes does any one know the new capital gains for the old cars?

I could gift my daughter a $100K car and it's tax free :

The only bad thing with this is she will have to pay the gain from the date you got it..  So if the car was $50.00. That is her cost. not 100K..

 

 

 

 

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7 hours ago, ted sweet said:

as a cpa I take that's as insult to my profession

 

Ted,  not trying to insult anyone, but my CPA was pretty clear that you paid the 28% rate on cars as they were collectibles.  That is not true unless it just changed.  

 

The thing I'm really worried about is exchanging 1 car for other cars.   Historically your basis moved to the traded cars.  But did that just change with the new law?

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Apparently a car does not qualify as a "collectible" according to IRS rules. Not even a collectible car is a collectible according to IRS tax law.

 

http://olympiaridge-pfa.com/collector-cars-and-the-tax-man/

 

But isn’t a collectible taxed at a capped 28%? In some cases, yes but not in the case of cars. Federal law indicates that cars, whether personal use or not, are not treated as collectibles for tax considerations.

 

http://journal.classiccars.com/2014/01/22/selling-classic-without-selling-irs/

 

But what about the 28-percent federal tax on “collectibles”? Don’t worry, Draneas said, because federal tax law does not include cars within the definition of collectibles (which he said is a fact that escapes the notice of some accountants).


OK, so you sell a classic you’ve owned more than a year and you pay 20 percent in federal taxes on the profit. That’s it, right? Not quite. There is a new net investment income tax of 3.8 percent on anyone making $200,000 or more per year. Plus, there is the matter of state income taxes.

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