which means it is not taxable
it is intuitive - the fair market value of the car when you purchased it was about $22,000 and you paid $34,000 for it. You just didn't know the fair market value was so much lower when you negotiated! So your loss was about $12,000 and you are being given $10,000 by the manufacturer, so since the cash you receive ($10,000) doesn't exceed your loss of $12,000, it is not taxable.
