Antique Car Seller wanting Buyer To Fill Out A 1099 Tax Form For Accepting Cash

[Trulyvintage]

Can a Seller legally require a Buyer

to fill out an IRS 1099 tax form

to buy a vehicle the Buyer is

paying cash for ?

 

 

Jim

[TexRiv_63]

Don't know about legality but what is the point? Is the seller a registered dealer?

[arcticbuicks]

another interesting tax problem since the USA implemented the AES electronic filing system [in place a few years now] for cars sold to out of country buyers........a USA citizen selling a car to a out of country buyer for cash or any method of payment.....is on the hook required to have a federal tax number,and will be forced to get one .......all unknowingly if the buyer hasnt entered the AES properly on their part 

[Trulyvintage]

16 minutes ago, TexRiv_63 said:

Don't know about legality but what is the point? Is the seller a registered dealer?

 Private Party Seller

 

 

Jim

[Trulyvintage]

6 minutes ago, arcticbuicks said:

another interesting tax problem since the USA implemented the AES electronic filing system [in place a few years now] for cars sold to out of country buyers........a USA citizen selling a car to a out of country buyer for cash or any method of payment.....is on the hook required to have a federal tax number,and will be forced to get one .......all unknowingly if the buyer hasnt entered the AES properly on their part 

Buyer & Seller both reside in

the lower (48) states.

 

Vehicle is with Seller.

 

Jim

[George Smolinski]

1 minute ago, Trulyvintage said:

 Private Party Seller

 

 

Jim

So this fool (the seller) wants to report to his tax and spend uncle who already pisses away too much of our money that he sold his car for cash and he wants to pay more taxes by having a 1099 filled out on him. It's none of the government's business what you sell unless you're doing it for a living.

To quote Ron White - "There's no cure for stupid."

To quote John Wayne - "Life is hard. It's harder when you're stupid."

[1937hd45]

Seriously? You're not making this up? 

[Steve Moskowitz]

The 1099 form is used to report non-employment income to the Internal Revenue Service (IRS). Businesses are required to issue a 1099 form to a taxpayer (other than a corporation) who has received at least $600 or more in non-employment income during the tax year.

 

The seller is obviously confused!  He may be thinking of Form 8300 which is for banks and businesses that accept over $10,000 in cash.  That still would not apply to a private transaction.

 

 

 

[Cadillac Fan]

37 minutes ago, George Smolinski said:

So this fool (the seller) wants to report to his tax and spend uncle who already pisses away too much of our money that he sold his car for cash and he wants to pay more taxes by having a 1099 filled out on him. It's none of the government's business what you sell unless you're doing it for a living.

To quote Ron White - "There's no cure for stupid."

To quote John Wayne - "Life is hard. It's harder when you're stupid."

While that is a nice sentiment, it is completely factually incorrect.  
 

If the car is sold with a profit, the IRS considers it a capital gain and is subject to capital gains tax, regardless of whether you sell cars for a living.  
 

Creating the paperwork to prove this is smart for the seller if he/ she wants to follow the law. 

Now, if you want to skirt the tax laws then good luck to you if you get audited.    

[pkhammer]

  Gazillions of cash transactions take place annually with no thought given to making sure Uncle Sam gets his cut. I'm not saying this is right or wrong but I will say what the seller is asking is HIGHLY unusual. A private seller has no right to require the buyer to fill out a 1099. If the seller wants to report capital gains on the sale then he can report it when he files his taxes.

[Trulyvintage]

1 minute ago, pkhammer said:

  Gazillions of cash transactions take place annually with no thought given to making sure Uncle Sam gets his cut. I'm not saying this is right or wrong but I will say what the seller is asking is HIGHLY unusual. A private seller has no right to require the buyer to fill out a 1099. If the seller wants to report capital gains on the sale then he can report it when he files his taxes.

For me ^^^^^ sums up nicely what 

I thought was made sense.

 

 

Jim

[TerryB]

If it’s more than $10k, the seller may want to have good proof the money was from selling a car.  Banks are supposed to flag large cash deposits in case they are drug deals or whatever.  The seller is just trying to have proof that the cash was from a legitimate transaction.  The seller might have had a bad experience in the past that prompted him to do this.  Unusual but one way to protect yourself for having so much cash on hand.

[46 woodie]

Along the same lines as Cadillac Fan.  My income tax guy knows I restore antique cars and told me that from now on he wants me to save every invoice for everything I buy, even a 1/4"-20 nut. I asked him why and he said with the hiring of thousands of new I.R.S. agents nobody knows what's going to happen. He said if you purchase a car for say $10,000 and restore it, what you sell it for MIGHT now be considered "capitol gains", he just does not know. He went on to say, even if you purchased your antique car 40 years ago and make a profit when you sell it, same rule MIGHT apply. He told me that none of this may happen, it's all talk among his fellow accountants,  but he want's me to be prepared if it does. How the heck does the government know how many antique cars I have and if I sell one how do they know how much I originally purchased it for?

[alsancle]

8 minutes ago, 46 woodie said:

Along the same lines as Cadillac Fan.  My income tax guy knows I restore antique cars and told me that from now on he wants me to save every invoice for everything I buy, even a 1/4"-20 nut. I asked him why and he said with the hiring of thousands of new I.R.S. agents nobody knows what's going to happen. He said if you purchase a car for say $10,000 and restore it, what you sell it for MIGHT now be considered "capitol gains", he just does not know. He went on to say, even if you purchased your antique car 40 years ago and make a profit when you sell it, same rule MIGHT apply. He told me that none of this may happen, it's all talk among his fellow accountants,  but he want's me to be prepared if it does. How the heck does the government know how many antique cars I have and if I sell one how do they know how much I originally purchased it for?

 

If you happen to be lucky enough to sell your car for more than you have in to it the IRS will 100% consider that capital gains.   Everybody should keep all their receipts in any event because it helps when you go to sell the car to show what you have done with real documentation.

 

 

[pkhammer]

  My tax man gave me the same basic advice. I am mostly a parts guy but I do purchase a car for resale once in a while. I know that when I take a big check (or cash) to the bank it's going to get reported to the IRS. I make dang sure such transactions get reported on my taxes so as not to raise concerns that I'm trying to hide something.

[West Peterson]

4 minutes ago, alsancle said:

 

If you happen to be lucky enough to sell your car for more than you have in to it the IRS will 100% consider that capital gains.   Everybody should keep all their receipts in any event because it helps when you go to sell the car to show what you have done with real documentation.

 

 

 

Agreed. One already is required to pay capital gains tax when selling a collector car... that is, as Al points out ... if you sold it for more than you have invested.

[alsancle]

6 minutes ago, West Peterson said:

 

Agreed. One already is required to pay capital gains tax when selling a collector car... that is, as Al points out ... if you sold it for more than you have invested.

 

The impossible part is selling it for more than you have invested.   I'm batting about .050.

[MotiveLensPhoto]

1 hour ago, 46 woodie said:

Along the same lines as Cadillac Fan.  My income tax guy knows I restore antique cars and told me that from now on he wants me to save every invoice for everything I buy, even a 1/4"-20 nut. I asked him why and he said with the hiring of thousands of new I.R.S. agents nobody knows what's going to happen. He said if you purchase a car for say $10,000 and restore it, what you sell it for MIGHT now be considered "capitol gains", he just does not know. He went on to say, even if you purchased your antique car 40 years ago and make a profit when you sell it, same rule MIGHT apply. He told me that none of this may happen, it's all talk among his fellow accountants,  but he want's me to be prepared if it does. How the heck does the government know how many antique cars I have and if I sell one how do they know how much I originally purchased it for?

Tax laws get rewritten ever year so he's correct in that you could be responsible for some tax that doesn't exist now, but the whole 87000 new agents is a bit of paranoia, IMO. The hire is over a number of years, is not just investigators but many different irs positions, and many are to replace retirees. https://www.nytimes.com/2022/11/06/us/politics/irs-agents-fact-check.html

 

As for the original question, the sale will get reported regardless of the form of payment once the title is transferred. The price and terms go along with it. The idea is always true, however, PAPER TRAILS ARE ALWAYS BEST and GET A GOOD ACCOUNTANT.

 

 

 

 

Edited April 22, 2023 by Golden73 (see edit history)

[Trulyvintage]

Reading all of the replies ….

I am glad that I do not have such

concerns to deal with in my Life.

 

 

Jim

[1935Packard]

This is not legal advice — if it were, it would be followed by a bill — but my understanding is that (1) if you sell the car for more than you paid, you will have capital gains that the law requires you to report (and pay up to a 20% payment on the difference, depending on your income level); (2) I suppose a seller could refuse to sell you the car unless you fill out a form, but they don't have any independent legal authority to make you fill out a form afterwards, and (3) a 1099 form is about income, not gains, so it's not the appropriate form anyway.  

 

As for the view that you don't have to follow the tax laws, well, that's not the law, as you might guess.

[old car fan]

Me thinks,taxing  a car that could  would have been taxed, ok,10 times, f uped. Buy a 50 grand  prewar  car ,and pay more  taxes, bullcrap ,how many times is the car paid  for,just like  property taxes, you  never own  your home 

Edited April 22, 2023 by old car fan (see edit history)

[Soupiov]

I would think that a copy of a bill of sale signed by the buyer with the sales price noted would be

all the seller needs to meet his tax obligation and would be enough to establish whether or not there is a taxable gain.

[alsancle]

I agree with Orin, the idea that a buyer has to fill out a 1099 is Absolutely ridiculous. A 1099 indicates that you made some income. Not that you wrote a check for some stupid pile of crap car.

[TerryB]

I really think the seller, who wants the 1099 form filled out, wants to show the bank where he got $XXXXXX amount of cash that he is depositing.  I’m not sure the seller is using the right form for doing this but that is the route he is taking.  If the seller wanted to hide his income, he certainly would not be asking for any paper trails.  Funny how nobody thinks this seller is an up and up guy for trying to do the right thing.

[yachtflame]

Could be that he is selling the car for much less than he has in it. As in capital gains are taxable, capital losses are deductible. In that case, he can declare it as a loss and apply that at, I believe $3000 a year until it nulls out. 

[alsancle]

3 minutes ago, TerryB said:

I really think the seller, who wants the 1099 form filled out, wants to show the bank where he got $XXXXXX amount of cash that he is depositing.  I’m not sure the seller is using the right form for doing this but that is the route he is taking.  If the seller wanted to hide his income, he certainly would not be asking for any paper trails.  Funny how nobody thinks this seller is an up and up guy for trying to do the right thing.

The right thing is for him to report the profit on this taxes if there are any.  This has nothing to do with the buyer.

[zdillinger]

If he's so worried about taking cash to the bank, he could just do a proper bill of sale, separate from the title. A 1099 seems incorrect. 

Edited April 24, 2023 by zdillinger (see edit history)

[John Bloom]

As some suggested above, I'm not thinking he wants documentation to back up his capital gain and then pay more taxes........I'm guessing he wants documentation of what he got so he can take a loss  and a write off.  

 

.....bought car for 10K, stored if for 10 years($), insured if for 10 years ($), license and registration for 10 years ($), repairs, dues to the car club, repainted it, 2 new batteries, water pump, tires, etc........and then sold it for 10K........so I want a piece of paper that shows I got 10K and have proof that I lost money............  

 

Maybe that was the angle...........

[1937hd45]

8 minutes ago, John Bloom said:

As some suggested above, I'm not thinking he wants documentation to back up his capital gain and then pay more taxes........I'm guessing he wants documentation of what he got so he can take a loss  and a write off.  

 

.....bought car for 10K, stored if for 10 years($), insured if for 10 years ($), license and registration for 10 years ($), repairs, dues to the car club, repainted it, 2 new batteries, water pump, tires, etc........and then sold it for 10K........so I want a piece of paper that shows I got 10K and have proof that I lost money............  

 

Maybe that was the angle...........

Can that be done for guys that play Golf for 10 years? 

[alsancle]

1 hour ago, John Bloom said:

As some suggested above, I'm not thinking he wants documentation to back up his capital gain and then pay more taxes........I'm guessing he wants documentation of what he got so he can take a loss  and a write off.  

 

.....bought car for 10K, stored if for 10 years($), insured if for 10 years ($), license and registration for 10 years ($), repairs, dues to the car club, repainted it, 2 new batteries, water pump, tires, etc........and then sold it for 10K........so I want a piece of paper that shows I got 10K and have proof that I lost money............  

 

Maybe that was the angle...........

I could be wrong, but I do not believe you can deduct the insurance and registration.

 

If you’re paying for storage, that would definitely count. If you’re going to use your own garage, then that is like claiming a home office, which feels like an audit flag to me.

[yachtflame]

If you claim storage at your own garage, then you have to depreciate you garage on a 10 year schedule.

[John Bloom]

34 minutes ago, alsancle said:

I could be wrong, but I do not believe you can deduct the insurance and registration.

 

If you’re paying for storage, that would definitely count. If you’re going to use your own garage, then that is like claiming a home office, which feels like an audit flag to me.

I'm sure you're right, I was being more general in my description with the thought that showing you "took a bath" on the car has tax ramifications just like "making a killing" does in theory.......

 

It may have nothing to do with the original post, but I know it has been discussed on here recently...........  Maybe the car was a 540K??......  sold for like 1.2 million a few years ago and just sold recently for like 760K...........the guys that play in that game have accountants.  I'm sure that loss is captured in their return.

 

Edited April 23, 2023 by John Bloom (see edit history)

[Frank DuVal]

7 hours ago, 46 woodie said:

How the heck does the government know how many antique cars I have and if I sell one how do they know how much I originally purchased it for?

You have titles for them in your name? Seems obvious for those that do. Of course, if you are not in a title state, or don't see a need to title cars, then no record.

[John348]

The seller controls the terms of the sale, if the buyer does not accept they cay can walk, what ever the seller reasons. The car could have been a gift, inherited, we don't know, the seller might their own real legal reasons not known to anyone,  Legally there is nothing binding to anyone.  What is the amount? There is big difference of someone handing me $10,000 or $275,000 cash.  

[avgwarhawk]

16 hours ago, TerryB said:

If it’s more than $10k, the seller may want to have good proof the money was from selling a car.  Banks are supposed to flag large cash deposits in case they are drug deals or whatever.  The seller is just trying to have proof that the cash was from a legitimate transaction.  The seller might have had a bad experience in the past that prompted him to do this.  Unusual but one way to protect yourself for having so much cash on hand.

Bingo. 

[Dandy Dave]

11 hours ago, 1937hd45 said:

Can that be done for guys that play Golf for 10 years? 

That's it! Start saving all the receipts from the 19th hole also.  

[Guest]

So if I get this right and you sell a car for more than you bought it you have to pay taxes on it.  Does that mean that if I lost money on it I can get a refund?

[Zimm63]

1 minute ago, swab said:

So if I get this right and you sell a car for more than you bought it you have to pay taxes on it.  Does that mean that if I lost money on it I can get a refund?

No.  Losses on personal property are not deductible.  Same is true if you lose money on your house.   If you are in the business of buying and selling cars, losses offset income, but you are then subject to a host of other issues including self employment tax.  

 

Want to know more about the rules for collectables vs capital gain property? See a qualified CPA.  

[Guest]

Only right if they charge you one direction, they refund in the other.  Of course if they cant do whats right then maybe they shouldnt do anything at all!

[60FlatTop]

It is laughable that this report was written by the IRS. The stereotypes and lack of professionalism makes it read like fodder from the diametrically opposed big media.

 

Cars are mentioned early.

 

However the "underground economy" is under aggressive attack by governments worldwide. It is insightful in many ways. No byline to credit it to but I think a member of the A. Bunker family is writing for the IRS.

 

https://www.irs.gov/pub/irs-utl/cashchapter8_210737.pdf

Edited April 23, 2023 by 60FlatTop (see edit history)