I'm ready to let go of my schedule C vehicle, which was classified for usage: 20% personal and 80% business (consulting). The car was purchased in 2019. I understand that if I sell it at a loss there will be no recapture tax. Does the IRS require that it be sold at FMV or can I determine the price? Like can I sell it for $10?
You'll need to sign in or create an account to connect with an expert.
who are you selling it to - related to you.? In an arms-length transaction, you can sell it for whatever you want. loss would be deductible at least in part.
if it isn't arms-length then you can also sell it for whatever you want but the loss might not be deductible and if the FMV exceeded the sales price by over about $17K a gift tax return might be required.
I'm thinking of selling it to my son-in-law. I'm not going to take any loss -or any deduction-my self-employment income is minimal and I'm phasing it out-- I'm just wondering about recapture. It seems like if I can legally do that it's a better idea, or does the IRS say no?
In Texas for example, if you buy a car from someone for less than the value according to their DMV list you still have to pay sales tax on the car according to their value. Does the IRS also have similar Math with recapture tax?
No, it doesn't work that way in your situation. You should be sure the car is not put in the name of your daughter to eliminate related party rules. The sales tax factor is out of my scope.
Related Party rules do not pertain to your son-in-law according to the IRS (not bloodline): (IRS Publication 544)
Use the following instructions to report the sale of your vehicle - this is a simple process and should be followed because of the possible business use changing year over year.
This completes your entry for your business vehicle. Please update here if you have more questions and one of our Tax Experts will help.
[Edited: 03/13/2024 | 1:12 PM PST]
Still have questions?
Make a postAsk questions and learn more about your taxes and finances.
trrsj
New Member
knownoise
Returning Member
obeteta
New Member
samT5
New Member
jasonmark1993
New Member
Did the information on this page answer your question?
You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.