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Get your taxes done using TurboTax
Then this would not be taxable income. It is basically the manufacturer discounting the cost of the vehicle because it wasn't worth what you paid so they are "making you whole" by reducing the price to what the vehicle is worth.
What you will need to do is keep the paperwork they sent you for the settlement and reduce your cars basis by the $9k. This will help if you decide to sell the car. At that point you may have to report the sale if you make a profit. Ex. If you paid $30,000 for the car and then they send you a $9k check, your basis in the car is now $21,000. If it is a personal vehicle you sell it tomorrow for $25,000, then you would have a gain of $4,000 that you would need to report on your taxes next year. If you sold it for less than the $21,000, then you would not need to report anything.
But for this year, you do not need to report the $9,000 you received.
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