Hi, if my brother gifted me a car ($0), and now I sold it to a dealership, is that sale includable in my tax return?

[JulieCo · Accepted solution]

It depends.  First, note that gifts are not taxable to the receiver.  Second, more than likely you do not need to report the sale of the car unless it was used for business or was an investment.  

If the car is used for business or investment purposes, the cost or basis of the car gifted to you would be the original basis of what it was for the person giving you the gift.  So, if the giver's original basis at the time of the gift (which becomes your basis) was greater than the amount you sold it for, then you do not have a gain on the sale.  The previous owner's original basis was more than likely the price paid for the car (unless the car had been used for business and was fully depreciated) and you would only have a gain if the value of the sale of the car was more than the giver's original basis/cost of the car. 

[Edited 2/9/18, 5:00 a.m]

[samchrissy]

So for instance, if the FMV of the car right is $13,000, and the car was gifted 3 years ago, could one assume that the basis of the car is greater than the current FMV? Or is there a more specific way to find out the basis of the car gift at the time of the gift?

[JulieCo]

I edited my comment above to make it a little clearer -- the basis of the car would be the giver's ORIGINAL basis which more than likely is the price the giver paid for the car.  AND, note how gifts are not taxable to the receiver.  Unless, as noted above, this car was used for business or an investment, you don't need to report the sale of the car on your return.  (So you don't need to find the value of the car at the time of the gift.)

[samchrissy]

Thank you for the clarification.