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

[MotiveLensPhoto]

18 hours 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 don't know, but I take all my expenses and give them to my accountant. It's his job to know which is deductible. Fortunately, I'm self-employed and a corporation (corporations are people, my friend!!!) so the deductions add up.

[alsancle]

28 minutes ago, Golden73 said:

I don't know, but I take all my expenses and give them to my accountant. It's his job to know which is deductible. Fortunately, I'm self-employed and a corporation (corporations are people, my friend!!!) so the deductions add up.

I was talking specifically about capital gains on an antique car.   In a car used for business purposes it would be a much different deal.

[Ed Luddy]

For what ever reason seller wants this done is to be left up to buyer and seller to discuss privately. If there's a dispute, seller can just walk away and find another car/seller. Tale of caution is, make sure you keep receipts of all your parts, storage, outside labour bill's etc. I'm very bad keeping that stuff. Time to keep records!

[nat]

     The person who pays more than $600 to an individual for blaa blaa blaa.  

     It's the seller's responsibility, not the buyer's.

[JamesR]

On 4/22/2023 at 12:37 PM, Cadillac Fan said:

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.  

 

My question then is: what about capital losses? How many of us non-dealers try to deduct car sale losses from our taxes after a sale? And would the government let us get away with it?

[Cadillac Fan]

I believe that would be a personal loss and not deductible.    Check with a cpa.  If you GM have a large collection you can organize it to better deal with the taxes.  But for the everyday collectors you could not take the deduction. 
 

(I’ m just the messenger, I don’t make the laws). 
 

Contact a cpa for a real answer.  

[Zimm63]

10 hours ago, JamesR said:

 

My question then is: what about capital losses? How many of us non-dealers try to deduct car sale losses from our taxes after a sale? And would the government let us get away with it?

If you have a qualified practitioner preparing your return, nobody is going to try to deduct a loss on sale of personal property.  Its plainly not allowed.    

 

[Zimm63]

1 hour ago, alsancle said:

 

Again, I'm not an accountant, but I believe you need a like gain to deduct a like loss.  So you can't deduct your 10k loss on your collector car against your earned income, but if you happen to sell a car and make 10K and in the same year sell a different car and lose 10K then you are net zero gain for the year.

 

 

Glad you are not in the tax business.  You would have just committed malpractice, based on the facts presented.  

[alsancle]

1 hour ago, Zimm63 said:

Glad you are not in the tax business.  You would have just committed malpractice, based on the facts presented.  

Explain.

[Zimm63]

23 minutes ago, alsancle said:

Explain.

You cannot offset losses on the sale of one collectable against gains on the sale of another, absent being in the business of buying and selling collectables.   Internal Revenue Code is clear on that point.  Preparing a return that takes that position would be malpractice.  It would also expose the preparer to penalties for essentially ignoring the law.  

 

If you want more information, I will need a signed engagement letter and retainer to undertake tax advisory services.  I am a 40 year CPA and will not steer you wrong.  

 

Edited April 24, 2023 by Zimm63 (see edit history)

[alsancle]

12 minutes ago, Zimm63 said:

You cannot offset losses on the sale of one collectable against gains on the sale of another, absent being in the business of buying and selling collectables.   Internal Revenue Code is clear on that point.  Preparing a return that takes that position would be malpractice.  It would also expose the preparer to penalties for essentially ignoring the law.  

 

If you want more information, I will need a signed engagement letter and retainer to undertake tax advisory services.  I am a 40 year CPA and will not steer you wrong.  

 

 

I think this would have been a better response than the snarky one you gave.   

[avgwarhawk]

One thing is for sure, you're gonna get taxed somewhere along the way. Death and taxes are a certainty. Not always in that order. 

[ted sweet]

On 4/22/2023 at 1:36 PM, Steve Moskowitz said:

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.

 

 

 

try depositing more than 10k in cash to a personal account

[Steve Moskowitz]

9 hours ago, ted sweet said:

try depositing more than 10k in cash to a personal account

Yes, and that is why I said BANKS, everyone is bound by the 8300 rules at the bank.  Private transaction in my opinion and experience do not generate any forms.

[28 Chrysler]

Thieves are now required to account for their gains on their tax forms. (tax fraud charges)

A 1099 would do just fine.

[8E45E]

On 4/22/2023 at 12:11 PM, 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.

Maybe he's going to write the sale off as a 'capital loss'.   Perhaps it cost him $100K to restore the vehicle, with all his receipts to prove, and is selling the vehicle for "only" $70K.  Now he has a loss of $30K to show the IRS.

 

Craig

[Trulyvintage]

Thanks for all the replies.

 

I was contacted by another AACA

member here who was assisting 

the Seller in the transaction.

 

As it turns out - the Seller was confused

as to what a 1099 tax form was.

 

He was actually trying to avoid

pay any taxes  on the sale

as was the buyer that I was

going to transport for.

 

They were attempting to

facilitate a cash sale for

two early brass cars.

 

 

Jim

 

Edited April 26, 2023 by Trulyvintage (see edit history)

[alsancle]

On 4/24/2023 at 5:52 PM, Zimm63 said:

You cannot offset losses on the sale of one collectable against gains on the sale of another, absent being in the business of buying and selling collectables.   Internal Revenue Code is clear on that point.  Preparing a return that takes that position would be malpractice.  It would also expose the preparer to penalties for essentially ignoring the law.  

 

If you want more information, I will need a signed engagement letter and retainer to undertake tax advisory services.  I am a 40 year CPA and will not steer you wrong.  

 

 

Could you show the rest of us where in the tax code automobiles are defined as collectibles?    I think this is the right spot but I can't find where it says anything about cars:

 

http://uscode.house.gov/view.xhtml?req=(title:26 section:408 edition:prelim) OR (granuleid:USC-prelim-title26-section408)&f=treesort&edition=prelim&num=0&jumpTo=true#substructure-location_m

 

Investment in collectibles treated as distributions

(1) In general

The acquisition by an individual retirement account or by an individually-directed account under a plan described in section 401(a) of any collectible shall be treated (for purposes of this section and section 402) as a distribution from such account in an amount equal to the cost to such account of such collectible.

(2) Collectible defined

For purposes of this subsection, the term "collectible" means-

(A) any work of art,

(B) any rug or antique,

(C) any metal or gem,

(D) any stamp or coin,

(E) any alcoholic beverage, or

(F) any other tangible personal property specified by the Secretary for purposes of this subsection.

(3) Exception for certain coins and bullion

For purposes of this subsection, the term "collectible" shall not include-

(A) any coin which is-

(i) a gold coin described in paragraph (7), (8), (9), or (10) of section 5112(a) of title 31, United States Code,

(ii) a silver coin described in section 5112(e) of title 31, United States Code,

(iii) a platinum coin described in section 5112(k) of title 31, United States Code, or

(iv) a coin issued under the laws of any State, or

 

(B) any gold, silver, platinum, or palladium bullion of a fineness equal to or exceeding the minimum fineness that a contract market (as described in section 5 of the Commodity Exchange Act, 7 U.S.C. 7) requires for metals which may be delivered in satisfaction of a regulated futures contract,

 

if such bullion is in the physical possession of a trustee described under subsection (a) of this section.1

[Zimm63]

7 hours ago, alsancle said:

 

Could you show the rest of us where in the tax code automobiles are defined as collectibles?    I think this is the right spot but I can't find where it says anything about cars:

 

http://uscode.house.gov/view.xhtml?req=(title:26 section:408 edition:prelim) OR (granuleid:USC-prelim-title26-section408)&f=treesort&edition=prelim&num=0&jumpTo=true#substructure-location_m

 

Investment in collectibles treated as distributions

(1) In general

The acquisition by an individual retirement account or by an individually-directed account under a plan described in section 401(a) of any collectible shall be treated (for purposes of this section and section 402) as a distribution from such account in an amount equal to the cost to such account of such collectible.

(2) Collectible defined

For purposes of this subsection, the term "collectible" means-

(A) any work of art,

(B) any rug or antique,

(C) any metal or gem,

(D) any stamp or coin,

(E) any alcoholic beverage, or

(F) any other tangible personal property specified by the Secretary for purposes of this subsection.

(3) Exception for certain coins and bullion

For purposes of this subsection, the term "collectible" shall not include-

(A) any coin which is-

(i) a gold coin described in paragraph (7), (8), (9), or (10) of section 5112(a) of title 31, United States Code,

(ii) a silver coin described in section 5112(e) of title 31, United States Code,

(iii) a platinum coin described in section 5112(k) of title 31, United States Code, or

(iv) a coin issued under the laws of any State, or

 

(B) any gold, silver, platinum, or palladium bullion of a fineness equal to or exceeding the minimum fineness that a contract market (as described in section 5 of the Commodity Exchange Act, 7 U.S.C. 7) requires for metals which may be delivered in satisfaction of a regulated futures contract,

 

if such bullion is in the physical possession of a trustee described under subsection (a) of this section.1

There is a lot of mixed information regarding cars, which would fit under (F) above.  Google will give you opposing opinions to no end.   Consultation with an expert would be advisable.   Substitute the words "personal property" for collectable in my earlier statement and you have the other side.  Same result.  Losses are not deducible, outside of an actual business.  

 

 

Edited April 27, 2023 by Zimm63 (see edit history)

[ted sweet]

im a cpa . cars are excluded from the goverments defination of collectibles.