Reporting a third party car lease buyout

[sepias1]

Hello,

I leased a car with Toyota for 36 months and paid a total of 12k over this time period. The residual value of the car was 10k. I did a third party lease buyout to Carmax, who made an offer of 20k for the vehicle, so I made 10k profit without ever actually owning the car. How should I include this in my tax return?

- If my profit (10k) is less than what I paid over the course of 36 months (12k), would it be considered a capital loss and not have to report it? 

- Is my profit considered a capital gain since the residual value of the car was 10k and I completed a third party buyout with a 10k profit?

Please advise. Thank you

[Mike9241]

you can't sell what you don't own and I don't think Carmax would buy a hot car.  so it's likely you purchased the vehicle at the end of the lease term for $10K and then sold it to Carmax for $20K.  this should be reported as a short term capital gain.

[sepias1]

@Mike9241 Thank you for your reply. I guess I am not clear if in a third party lease buyout you actually own the car for the transaction, or if you are an intermediary. 

[Mike9241]

clarify the situation with Carmax.