[M3-san]

I guess I am in the minority here, but there's no way I'm selling my car for just a $20K profit. After that $20K was spent, I'm positive I'd regret the hell out of it. I have an emotional attachment to my car that's worth more than $20K.

[snareman]

Originally Posted by M3-san

I guess I am in the minority here, but there's no way I'm selling my car for just a $20K profit. After that $20K was spent, I'm positive I'd regret the hell out of it. I have an emotional attachment to my car that's worth more than $20K.

Well, I guess it depends what you would do with that 20k. Perhaps just spend it on something random or maybe put it towards a more expensive car, which is what I'd do.

[BGM-M3COMP]

Originally Posted by M3-san

I guess I am in the minority here, but there's no way I'm selling my car for just a $20K profit. After that $20K was spent, I'm positive I'd regret the hell out of it. I have an emotional attachment to my car that's worth more than $20K.

Exactly.

If the car was discontinued, or perhaps you changed your mind about the car and you don't like it anymore, or you lost your job etc, then yes 20k is a gift from god in THAT situation.

But 20k, if that's even real, plus the taxes taken out, plus that time you waited to even get the car in the first place, plus only making it to the break in service period of 1200 miles, no, 20k is peanuts in that regard.

40k+ now we're talking.

[robopp]

Originally Posted by M3-san

I guess I am in the minority here, but there's no way I'm selling my car for just a $20K profit. After that $20K was spent, I'm positive I'd regret the hell out of it. I have an emotional attachment to my car that's worth more than $20K.

BMW is going to make A LOT of M3s. They did it with the F80 and they'll do it again with the G80. Once the chip shortages, covid, blah blah blah end, BMW will start supporting the M3 significantly and the discounts will be plentiful.

[razman]

Originally Posted by daveg520

I brought my M3 in for break in service today and the service advisor asked if I’d sell/trade in. I said no, then he said he thinks they’d offer me around 20k over sticker. I told him to have sales manager email me an offer tomorrow. My car is dravit gray/kh orange interior, non-comp 6-speed as well as some nice packages-not fully loaded but close to it.

Are 6-speed’s really demanding crazy money? I guess I’ll see what the manager says tomorrow, I have no intentions or selling it unless it’s absolutely stupid money. Who knows.

My local dealer in Los Angeles had brand new manual M4s and competition M3s in stock recently and had them priced at 5k and 10k over sticker, respectively. No one was (immediately) biting. I'm not sure what market you're in, but I'm incredulous to the idea that a dealer would pay a private party 20k over sticker (or anything even close to that) on a used car in the hopes of being able to turn a meaningful profit. The guy was simply talking out of his ass.

[jimbethesda]

Originally Posted by BGM-M3COMP

Exactly.

If the car was discontinued, or perhaps you changed your mind about the car and you don't like it anymore, or you lost your job etc, then yes 20k is a gift from god in THAT situation.

But 20k, if that's even real, plus the taxes taken out, plus that time you waited to even get the car in the first place, plus only making it to the break in service period of 1200 miles, no, 20k is peanuts in that regard.

40k+ now we're talking.

Taxes taken out? I don't think the dealer is going to send out a 1099 at the end of the year.

[BGM-M3COMP]

Originally Posted by jimbethesda

Taxes taken out? I don't think the dealer is going to send out a 1099 at the end of the year.

If the dealer pays him more than what he paid, he has to file for that extra income, whatever that dollar amount is. Of course you can try to evade the IRS but i'm sure no one would do that. You will never win against the IRS.

Or he could dodge the taxes and immediately purchase another car from them using the profit he just made but then that defeats the purpose of that situation of getting a "20k profit".

[rak299]

In California, nearly half my "profit" would be eaten up by sales tax, license, etc. I would "just say no".

[NightWriter]

Originally Posted by BGM-M3COMP

If the dealer pays him more than what he paid, he has to file for that extra income, whatever that dollar amount is. Of course you can try to evade the IRS but i'm sure no one would do that. You will never win against the IRS.

Yes, technically true. This is a capital gain and, legally, needs to be declared. But unlike sales of investments, car purchase transactions are not reported to the IRS (and even state agencies likely aren't privy to the sales details), so my guess is they would not be likely to find out.

Originally Posted by BGM-M3COMP

Or he could dodge the taxes and immediately purchase another car from them using the profit he just made but then that defeats the purpose of that situation of getting a "20k profit".

I'm not an accountant, but I'm 99% sure this is wrong. You can't evade capital gains simply by spending them immediately. But, back to my previous point: if these gains are rolled into another purchase/transaction, the government is even less likely to find out/recognize this as a capital gain.

[wooblewobble]

Originally Posted by razman

My local dealer in Los Angeles had brand new manual M4s and competition M3s in stock recently and had them priced at 5k and 10k over sticker, respectively. No one was (immediately) biting. I'm not sure what market you're in, but I'm incredulous to the idea that a dealer would pay a private party 20k over sticker (or anything even close to that) on a used car in the hopes of being able to turn a meaningful profit. The guy was simply talking out of his ass.

I'm by no means an expert in this, but I've read that because production and supply is so low, dealers sometimes just want inventory so they don't look as empty and can draw people in more easily. Maybe the premium they're purportedly willing to pay OP is as an "investment" in marketing, so they can have a showroom queen that will at least draw people in to buy other cars they have.

[snareman]

Originally Posted by NightWriter

Yes, technically true. This is a capital gain and, legally, needs to be declared. But unlike sales of investments, car purchase transactions are not reported to the IRS (and even state agencies likely aren't privy to the sales details), so my guess is they would not be likely to find out.



I'm not an accountant, but I'm 99% sure this is wrong. You can't evade capital gains simply by spending them immediately. But, back to my previous point: if these gains are rolled into another purchase/transaction, the government is even less likely to find out/recognize this as a capital gain.

And I'm REALLY no accountant, but I believe if you trade a car in there is a tax advantage for the amount of the trade in, so if you trade in a $50k car on a $100k purchase you only pay taxes on the remaining $50k?

[BGM-M3COMP]

Originally Posted by NightWriter

Yes, technically true. This is a capital gain and, legally, needs to be declared. But unlike sales of investments, car purchase transactions are not reported to the IRS (and even state agencies likely aren't privy to the sales details), so my guess is they would not be likely to find out.



I'm not an accountant, but I'm 99% sure this is wrong. You can't evade capital gains simply by spending them immediately. But, back to my previous point: if these gains are rolled into another purchase/transaction, the government is even less likely to find out/recognize this as a capital gain.

If OP were to sell his car to the dealer, how would the dealer pay him?

Cash? no

Certified check? Yes. With his name on it.

How does the dealer go about in making a 20k check to OP with no paper trail of being caught by the IRS?

The only way to avoid this, were to be to purchase a car from them, the gain he made from the trade in would offset the tax from the "new car" he would have purchased from them. Not necessarily, "dodging" taxes. I used the wrong word.

[jimbethesda]

Originally Posted by BGM-M3COMP

If OP were to sell his car to the dealer, how would the dealer pay him?

Cash? no

Certified check? Yes. With his name on it.

How does the dealer go about in making a 20k check to OP with no paper trail of being caught by the IRS?

The only way to avoid this, were to be to purchase a car from them, the gain he made from the trade in would offset the tax from the "new car" he would have purchased from them. Not necessarily, "dodging" taxes. I used the wrong word.

If they asked for your SSN it's reported.

But, this gain is easily offset by a loss on your previous car.

So, this hypocritical $20k gain should not be taxable for many of the reasons already stated, plus easy to offset.

[BGM-M3COMP]

Originally Posted by jimbethesda

If they asked for your SSN it's reported.

But, this gain is easily offset by a loss on your previous car.

So, this hypocritical $20k gain should not be taxable for many of the reasons already stated, plus easy to offset.

Any business transaction above 10k in a cash transaction (or check in this case) has to be reported to the IRS.

Same reason why you have to put your car's value (if you bought a car off craigslist etc) to the DMV when you register it. Unless you just put, "gift", but they will investigate.

So yes a dealer will report why they just made a check of 20k to OP.

I wouldn't mess with the IRS.

[jimbethesda]

Originally Posted by BGM-M3COMP

Any business transaction above 10k in a cash transaction (or check in this case) has to be reported to the IRS.

Same reason why you have to put your car's value (if you bought a car off craigslist etc) to the DMV when you register it. Unless you just put, "gift", but they will investigate.

So yes a dealer will report why they just made a check of 20k to OP.

I wouldn't mess with the IRS.

Again, it's reported, but you can easily offset the gain with a loss on your previous car so your net taxable income is $0. Unless this is your first ever car

[jimbethesda]

Originally Posted by BGM-M3COMP

Any business transaction above 10k in a cash transaction (or check in this case) has to be reported to the IRS.

Same reason why you have to put your car's value (if you bought a car off craigslist etc) to the DMV when you register it. Unless you just put, "gift", but they will investigate.

So yes a dealer will report why they just made a check of 20k to OP.

I wouldn't mess with the IRS.

And the check is way bigger than $20k. It's $20k plus the original price. Let's just call it $100k. One offset is the cost of the car your selling back. Plus any other losses. Very easy to report a $0 gain.

[BGM-M3COMP]

Originally Posted by jimbethesda

And the check is way bigger than $20k. It's $20k plus the original price. Let's just call it $100k. One offset is the cost of the car your selling back. Plus any other losses. Very easy to report a $0 gain.

If OP bought the car for 80k, but dealer wants to give him 100k, whether or not OP still owes any part of that 80k, he will have to justify getting a 20k profit from the dealer.

A dealer won't just say here's the 20k, go have fun. They have to report why they gave up 20k to a customer, even though somehow, someway, OP decides to not report it.

This is no different than you working for someone off the books and they pay you cash each week. Yes it's all gravy collecting cash each week and even if you say, "cool i won't even report all this money i made all year". Well the person you were working for, under the books, did.

You can't beat the IRS. You can duck them a year or 2 etc, but they will find out.

Unless whatever you're doing for extra income is illegal, then yes they will know.

[jimbethesda]

Originally Posted by BGM-M3COMP

If OP bought the car for 80k, but dealer wants to give him 100k, whether or not OP still owes any part of that 80k, he will have to justify getting a 20k profit from the dealer.

A dealer won't just say here's the 20k, go have fun. They have to report why they gave up 20k to a customer, even though somehow, someway, OP decides to not report it.

This is no different than you working for someone off the books and they pay you cash each week. Yes it's all gravy collecting cash each week and even if you say, "cool i won't even report all this money i made all year". Well the person you were working for, under the books, did.

You can't beat the IRS. You can duck them a year or 2 etc, but they will find out.

Unless whatever you're doing for extra income is illegal, then yes they will know.

You a CPA? I am. Let me start over..I'm not suggesting "ducking" or doing something illegal. Just that in almost every scenario, you won't end up with $20k extra of taxable income.

Have you ever sold a car to a dealership (not as a trade in)? I have, several times. Here's how this plays out.

Scenario 1
You sell the car to the dealership for $100k. The dealership does not ask for your SSN. I personally wouldn't do anything. I would not bother to put the $100k on my tax return. In the very unlikely scenario that I got a letter from the IRS asking about the $100k, I would first report that $80k of it was my cost basis, then I would show my loss on previous car(s) that total at least $20k.

Net result: No increase in taxes.

This is the most likely scenario. No dealership asked me for my SSN.

Scenario 2
The dealership does ask for my SSN for reporting purposes. I then get a 1099 for $100k at the end of the year. I do the same thing I would have done in scenario 1, report the $80k of my tax basis and also a prior loss.

Net result: No increase in taxes

There is no scenario where the dealership reports to the IRS that they gave me a $20k profit. It's either $0 or $100k.

[cole1186]

Originally Posted by jimbethesda

You a CPA? I am. Let me start over..I'm not suggesting "ducking" or doing something illegal. Just that in almost every scenario, you won't end up with $20k extra of taxable income.

Have you ever sold a car to a dealership (not as a trade in)? I have, several times. Here's how this plays out.

Scenario 1
You sell the car to the dealership for $100k. The dealership does not ask for your SSN. I personally wouldn't do anything. I would not bother to put the $100k on my tax return. In the very unlikely scenario that I got a letter from the IRS asking about the $100k, I would first report that $80k of it was my cost basis, then I would show my loss on previous car(s) that total at least $20k.

Net result: No increase in taxes.

This is the most likely scenario. No dealership asked me for my SSN.

Scenario 2
The dealership does ask for my SSN for reporting purposes. I then get a 1099 for $100k at the end of the year. I do the same thing I would have done in scenario 1, report the $80k of my tax basis and also a prior loss.

Net result: No increase in taxes

There is no scenario where the dealership reports to the IRS that they gave me a $20k profit. It's either $0 or $100k.

How do you show a loss on your previous cars of $20k?

[jimbethesda]

Originally Posted by cole1186

How do you show a loss on your previous cars of $20k?

Schedule D

[NightWriter]

Originally Posted by BGM-M3COMP

If OP were to sell his car to the dealer, how would the dealer pay him?

Cash? no

Certified check? Yes. With his name on it.

How does the dealer go about in making a 20k check to OP with no paper trail of being caught by the IRS?

I wasn't suggesting that it's not traceable from a law-enforcement perspective, just that the IRS doesn't automatically receive copies of such transactions the way they do 1099-B forms when selling securities.

[jimbethesda]

Originally Posted by NightWriter

I wasn't suggesting that it's not traceable from a law-enforcement perspective, just that the IRS doesn't automatically receive copies of such transactions the way they do 1099-B forms when selling securities.

Yup.