Car Sale/Income Tax Question

[riverdance]

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I meant I think there is no sales tax if I give my girlfriend a $5,000 car, since there was no sale, only a gift. [ QUOTE ]


let's say i bought your car for 5000. i should owe SALES tax on that 5000. but if i convince you to write a letter that says you gave me the car, i would owe nothing? seems like every buyer would just say it was a gift (and the buyer would then give the seller, say, half of what it would have cost in SALES tax). you see the potential for tax evasion? that's why i thought it was strange your gf didn't owe SALES tax.


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Also, if I buy a car for $500 at an auction. Then sell it in the paper for $5,000. Why don't I owe a $4,500 income tax.

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yes, you have then moved beyond using the car for personal use, and now are IN THE BUSINESS of re-selling cars. if you only did this once or twice, you could probably get away with it. but once it becomes more frequent, the irs is going to assume that you are buying the cars for INVESTMENT purposes.