Re: [Chrysler300] Selling a 300

["C Bilter" <cbilter@xxxxxxxxx>]

Here is a very oversimplified explanation.  An automobile sold at profit is subject to capital gains taxes (federal, state, and local (if applicable)) just as any other asset such as a home or art or mutual fund shares might be.  The profit is the selling price less the cost basis.  The key is to correctly calculate the cost basis, which requires that careful recoding of expenditures has taken place.  The cost basis is the original cost of the asset plus any capital improvements.  Capital improvements do not include maintenance expenses (such as oil changes on a car, or new furnace filters for the house).  Capital improvements can be arguable.  If you buy an unrestored, trashed 300 and install a new Gary Goers interior, that would be a capital improvement I would think.  If you bought the 300 brand new, most changes over the years would probably be considered maintenance I would think.  But if you added factory A/C (and the car did not have it originally), that would be a capital improvement, like adding a deck and patio to a house that did not have one when purchased.  It gets complicated, naturally.  There are long term gains (assets held more than one year) and short term gains (assets held less than one year), that are taxed at different rates.  Would one expect less from the IRS?

Some folks try the opposite and claim capital losses for cars sold at a loss.  This gets tricky as well.  If you’re not in business to sell cars, the IRS may look at this activity as a hobby and disallow the losses.

Note: I am not a tax expert.  I just stayed at a Holiday Inn Express.  It would be wise to consult an expert for details.  I would start by doing research on the internet, which is free unlike the pros.

Carl B with a J

From: Terry Mctaggart 
Sent: Monday, April 22, 2013 8:57 AM
To: Listserver Chrysler Club 
Subject: [Chrysler300] Selling a 300

  
Looking at the asking and sales prices of 300s, some of our cars are beginning to be worth real money.  Does anybody out there have any knowledge / experience on how to handle the tax issues, both federal (capital gains) and local (sales) issues of such an exchange?  Terry McTaggart

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