Hello, I am hoping someone might be able to answer my query. It is 2022, (tax year) and I am selling a personal vehicle I have had for 50 years! It is a collectible, but a daily driver. How do I determine its basis? Do I list what I paid for it in 1972? Do I calculate all the repairs, etc. over 50 years and then subtract all that from the sale price? I am not sure about the best approach, or if IRS allows those past items to be calculated to form a basis. Or do they only allow what it cost me to actually sell the vehicle? Thank you in advance for any respose.
Q. How do I determine its basis? Do I list what I paid for it in 1972?
Q. Do I calculate all the repairs, over 50 years, and then subtract all that from the sale price (or add them to the cost basis)?
A. No. You cannot count repairs. You can count "improvements", such as any restoration cost.
Any profit on the sale of personal property is taxed as a capital gain. The sale of a "collectible" is taxed at ordinary income rates (but not more than 28%). For tax purposes, the car you described ("personal vehicle I have had for 50 years" and "a daily driver") is most likely personal property and not a collectible.
Thank you for your prompt response! It is much appreciated. Now to figure out where all this goes in TT. I was going to try and put it in last year's taxes just to get an idea of what this income would mean for us, as a rough figure and the process, but haven't gone through the old interview again. Not sure how much different this year's taxes will be than last year as far as what the IRS is looking for.
you report the sale in the year actually sold. That means you don't report it on your 2021 return. since this seems to be personal property any loss is not deductible. any selling expenses are taken into account in determining gain or loss.
I sse you have TT Home and Business. Make a copy of your 2021 return. Save the copy as "2022 prliminary" (or some such wording). Then you can manipulated it for any tests you want or keep a test return going, for 2022 planning.
In TurboTax (TT), enter at:
- Federal Taxes tab (Personal in Home & Business)
- Wages & Income
- “I’ll choose what I work on” Button
Scroll down to:
-Stocks, mutual funds, Bonds, Other (Personal property is other)
Answer no, when asked if you got a 1099-B. then follow the interview.
Thank you for your response. My reference to my 2021 tax was just to learn to find out where in the tax forms the sale will go, and to "practice" and get a rough idea of what the amount of sale will add to my income. I figured since my income is always close to the same, it would give me an idea and help me prepare for my 2022 taxes. I don't know if the 2022 TT is out yet.
Thanks so much for the directions. I will give it a try! I just want a general "ballpark" idea of what the sale of this vehicle will do to my income. I know someone above said they didn't think this would be a "classic car" as it is a "daily driver", but it is 50 years old and is in very good original condition, and is worth about quadruple of what we originally bought it for.