My leased car (3 yrs, for personal use) is due to be turned in to the leasing company (lease assigned by the dealer) or purchased (in 2022). As is generally true for used cars at this time, the car has appreciated in value during the lease period.
CarMax has valued the car at $27,000. CarMax has offered to purchase the car by (1) paying the lessor the lease residual value (~$17,000) and (2) paying me ~$10,000.
Q1. Is the $10,000 payment to me taxable?
Q2. If so, is it a long term capital gain or a short term capital gain?
Q3. If a capital gain, do I have any tax basis in the car reportable on Schedule D?
Q4. If ordinary income, how would I report it?
I paid sales tax on each lease payment.
Q5. Do I have any further sales tax liability associated with the above scenario?
Q6. Or does CarMax have a sales tax liability with its purchase of the car?
