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Tax on out of country car sales?

AlpineIan

AlpineIan

SAOCA Founder
Here's one for you guys. If I sell a car out of the country for a sum over 20K and get money transfered into my account... what are my tax responsibilities at the end of the year? What is the best way to handle a transaction like this?

I don't think the sale price will be more than my investment, but I don't know if I have enough documentation to prove that for taxes. Advice?
 
Nickodell

Nickodell

Donation Time
I'm neither an accountant nor a lawyer, but my opinion is that you cannot be taxed unless you realize a profit, in which case it would be taxed as a capital gain (if you're dumb enough to report it). And I would opine also that it matters not whether you sell it abroad or in the USA; however, the country where you sell it might want to tax you, either on the profit or via a sales tax.

I recall touring NE Canada in 1971 towing a large travel trailer, and having to fill out a lot of paperwork on entering the country. On leaving we should, apparently, have completed the rest of the paperwork but nobody asked me anything when we crossed over at Niagara Falls. Some weeks later I received a letter from some Canadian government revenue department demanding proof that we had re-exported the car and trailer and not sold it in their country. They suggested that I return to the "port of exit" and show the car and trailer.

Yep, sure. I'm going to make a 500-mile round trip to satisfy some bureaucrat. And the trailer was rented in any case. I got some more letters for the next year, and then they petered out. I have them somewhere with the one I received from the Mounties - big impressive coat of arms etc. - threatening to "arrest you on sight" if I came back to Canada because of a dozen or so ignored parking tickets. These people take life so seriously!
 
todd reid

todd reid

Gold Level Sponsor
Tax

I am a professional accountant. Gains on personal (non-business) property are taxable, and losses are not deductible. The fact that the money is coming from outside the country does not change the tax situation, but probably increases the visibility of the transaction. The odds are in your favor that you can get away with anything, since the IRS only audits 1 or 2% of the returns. If your return is audited, you could be called upon to prove that you sold at a loss (keep in mind that your own labor does not count as part of your cost). If you are truely selling at a loss, put nothing on your return. Just keep what ever records you do have for 7 years in case your return is ever questioned.
 
65sunbeam

65sunbeam

SAOCA Membership Director
Diamond Level Sponsor
Ian-remember that any movement of funds of $10,000 and over in or out of your bank account requires the bank to send a form to the IRS or some other agency-I don't remember which one at the moment. Call your bank and check. So just get several funds wired to you of less than $10,000.......Eric
 
husky drvr

husky drvr

Platinum Level Sponsor
65sunbeam said:
Ian-remember that any movement of funds of $10,000 and over in or out of your bank account requires the bank to send a form to the IRS or some other agency-I don't remember which one at the moment. Call your bank and check. So just get several funds wired to you of less than $10,000.......Eric
Click to expand...


I am thinking the limit is much lower now. Maybe $2000 but I think $5000. I think the change was made with the Homeland Security package. :eek:

It's funny but I don't really feel more secure.
 
AlpineIan

AlpineIan

SAOCA Founder
Yes, it is Homeland Security and I believe it was lowered to 3,000. I was reading that they are also watching for consecutive transactions to one account as well as large transactions. From what I understand my bank will question me about the transactions and I would simple tell them it was from the sale of an automobile. They document it and the rest is history.
 
todd reid

todd reid

Gold Level Sponsor
Tax

PS Ian, Your car is the best looking Harrington I have ever seen. You have obviously put a lot of time & effort into it. I vote for ending the sale and keeping if, thereby avoiding any potential tax hassles!!
 
RootesRooter

RootesRooter

Donation Time
I suspect most car sales go unreported and fly under the IRS's radar, however....

....any gain would not only be taxable, but if the car is older and could be classified a "classic," (e.g. a Harrington Alpine) then it would be considered what the tax code calls a "collectible" and subject to a 28% tax rate instead of the normal 15% rate on capital gains.

Find those receipts!

signed - a very tired CPA today
 
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