New EV Tax credit: what happens if you sell after claiming $7,500 credit?

[rickybobby123]

Hello,

Avid TT user for decades. Love the product! However I have a question on tax implications of the EV tax credit.

I am considering purchasing an electric car and taking the $7,500 credit. I cannot find any information about what happens if I sell the car after taking possession and claiming the credit. Do I have to repay the credit? Where would I report the sale in TT? 

Credits for New Clean Vehicles Purchased in 2023 or After | Internal Revenue Service (irs.gov)

I believe the form is 8936: 

About Form 8936, Qualified Plug-In Electric Drive Motor Vehicle Credit | Internal Revenue Service (i...

[Critter-3]

There are no limitations on how long you must own the car before you can sell it and the credit does NOT need to be repaid.  

[Opus 17]

However, you may have a taxable gain.  The credit reduces your cost basis.  For example, of the car cost $50,000 then your cost basis after the credit is $42,500.  If you sold it as a used car for $45,000, for example, you have a taxable capital gain of $2,500 (selling price more than cost basis).

The cost basis adjustment may also have an effect on depreciation if you use the car for business.  

[fanfare]

@Opus 17 

where does it say that in IRS Pubs?

[Critter-3]

https://www.irs.gov/taxtopics/tc409

[Opus 17]

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@Critter-3 wrote:

https://www.irs.gov/taxtopics/tc409

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Also https://www.irs.gov/publications/p551

(page 5-6 of the pdf)