@mike8408 wrote:
No business use. The Blue Book value of the auto is nearly 8K higher than the residual, and my son needed a vehicle, so it appeared to be a win/win. I do want to check with the DMV as I need clarification regarding the sales tax. Concern is that I would pay a sales tax when I bought the car from the lessor and then my son would have to pay a sales tax when he purchased it from me.
There are no income tax complications in this situation. You would only have tax complications if you sold the vehicle for more than your cost basis. (Your cost basis is what you paid for the first half of the car during the lease, not counting finance charges, plus the residual cost you will pay when buying the other half of the car.)
This board is not really equipped to deal with sales tax issues, check with your state. If you were selling to an unrelated third party, it seems likely that you would pay sales tax and the third party would also pay sales tax. I would expect there to be an exemption for parent-child transfers, but you will need to know how to apply for that.
