Is it possible to give an individual a car and use that as a tax writeoff?

NikPreviousAcct

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Aug 15, 2000
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I dunno, but if the value of the vehicle is more than $10,000, they have to pay a percentage of the value of the car in tax to the feds for receiving it.
 

kranky

Elite Member
Oct 9, 1999
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No, because for a donation to be tax-deductible it must go to an organization registered with the IRS.

If you could do what you asked, you could give me a car and deduct it, then next year I could give the car back to you and I could deduct it, lather, rinse, repeat.
 

thomsbrain

Lifer
Dec 4, 2001
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Originally posted by: kranky
No, because for a donation to be tax-deductible it must go to an organization registered with the IRS.

If you could do what you asked, you could give me a car and deduct it, then next year I could give the car back to you and I could deduct it, lather, rinse, repeat.

yup.
 

bsobel

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Dec 9, 2001
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Originally posted by: Nik
I dunno, but if the value of the vehicle is more than $10,000, they have to pay a percentage of the value of the car in tax to the feds for receiving it.

Gift tax is on the giver, not the receiver...
 

NikPreviousAcct

No Lifer
Aug 15, 2000
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Originally posted by: bsobel
Originally posted by: Nik
I dunno, but if the value of the vehicle is more than $10,000, they have to pay a percentage of the value of the car in tax to the feds for receiving it.

Gift tax is on the giver, not the receiver...

Are you sure about that? :confused:
 

HappyPuppy

Lifer
Apr 5, 2001
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Originally posted by: bsobel
Originally posted by: Nik
I dunno, but if the value of the vehicle is more than $10,000, they have to pay a percentage of the value of the car in tax to the feds for receiving it.

Gift tax is on the giver, not the receiver...



That doesn't seem to make any sense. The giver has already paid income taxes on that money when they earned it.
 

NikPreviousAcct

No Lifer
Aug 15, 2000
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Originally posted by: HappyPuppy
Originally posted by: bsobel
Originally posted by: Nik
I dunno, but if the value of the vehicle is more than $10,000, they have to pay a percentage of the value of the car in tax to the feds for receiving it.

Gift tax is on the giver, not the receiver...



That doesn't seem to make any sense. The giver has already paid income taxes on that money when they earned it.

Gift tax is paid by the receiver. Personal experience++
 

bsobel

Moderator Emeritus<br>Elite Member
Dec 9, 2001
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Gift tax is paid by the receiver. Personal experience++

I'm afraid you are incorrect....

Q: Who pays the gift tax?

The donor is generally responsible for paying the gift tax. Under special arrangements the donee may agree to pay the tax instead. Please visit with your tax professional if you are considering this type of arrangement.
 

bsobel

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Dec 9, 2001
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That doesn't seem to make any sense. The giver has already paid income taxes on that money when they earned it.

It makes perfect sense when you realize our tax code is setup to disausde wealth transfer. If you think about the 11k rule (the one that says I can gift you only 11k per year before paying gift taxes), realize that rule doesn't mean you can only receive one 11k gift per year. It means, I can only give you one. My wife could do the same, as could your parents, etc. Receving more than 11k per year doesn't trigger the tax, giving does.

Ties into estate taxes, generation skipping taxes, etc....

Bill
 

NikPreviousAcct

No Lifer
Aug 15, 2000
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Originally posted by: bsobel
Gift tax is paid by the receiver. Personal experience++

I'm afraid you are incorrect....

Q: Who pays the gift tax?

The donor is generally responsible for paying the gift tax. Under special arrangements the donee may agree to pay the tax instead. Please visit with your tax professional if you are considering this type of arrangement.

Then why were my mother, two aunts, and uncle required to pay tax when my great grandparents gave them all $12k for christmas one year?
 

bsobel

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Then why were my mother, two aunts, and uncle required to pay tax when my great grandparents gave them all $12k for christmas one year?

They weren't, they probably misunderstood gift taxes or had the worlds worst accountant ;) Your grandparents may have told them they were responsible for any tax (if this was recent, only a tax on 2k of the gift would have applied). Not the usual situation, and if they did it themselves I'm willing to bet they did it wrong.

Bill

 

HappyPuppy

Lifer
Apr 5, 2001
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Weird. Just the govt. sticking it to us again. I suppose it would only affect wealthier people, though. Most middle class peeps don't have money to just give away.
 

NikPreviousAcct

No Lifer
Aug 15, 2000
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Originally posted by: bsobel
Then why were my mother, two aunts, and uncle required to pay tax when my great grandparents gave them all $12k for christmas one year?

They weren't, they probably misunderstood gift taxes or had the worlds worst accountant ;) Your grandparents may have told them they were responsible for any tax (if this was recent, only a tax on 2k of the gift would have applied). Not the usual situation, and if they did it themselves I'm willing to bet they did it wrong.

Bill

Nah this was, like, 10 years ago or so.
 

bsobel

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Dec 9, 2001
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Originally posted by: HappyPuppy
Weird. Just the govt. sticking it to us again. I suppose it would only affect wealthier people, though. Most middle class peeps don't have money to just give away.

Yep, since a married couple can give 22k per year to each recipient (say each kid or grandkid) thats still a fair amount of cash that can be transfered. It comes into play when a couple wants to give their kid a million dollars, it would take them 45 years to do it this way ;)
 

bsobel

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Nah this was, like, 10 years ago or so.

I honestly don't know the full history of the tax, it's definately possible this was different when that gift occured... Maybe our local CPAguy (CPAdude?) knows?