That depends. You would treat this as the "sale" of the car for the amount of the debt plus the overage they sent you. Sales of personal property for less than your cost basis is not taxable. Cost basis is generally what you originally paid. However, if the property was used in business (such as for ride share), then you have to adjust the cost basis by the amount of depreciation you could have taken, even if you didn't claim depreciation. Was this care ever used in business? We can take you through those steps. If not, it's not taxable unless the total amount of the "Sale" was more than you paid for the car.
