Level 8

Other tax discussions

Hi there!

 

I found this answer from an Enrolled Agent that applies to your situation. 

 

"The car you received as a present is a gift. Gifts are not taxable and you do not have to report them on your tax return. Your cost basis for this car is not zero, but the cost basis of the donor (what the donor bought it for). You only have a gain on that car only if you sold the car for more than what the donor paid for it (which is unlikely in most cases).

The new car that you bought in November is personal property. When you sell it, you have a gain if you sell for more than the purchase price and have to report that gain as capital gain. If you sell it for less than the purchase, you have a capital loss and capital losses on personal property are not deductible."

 

I hope this helps!