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Buying a Used Prius in California - Tax Consequences

Discussion in 'Gen 3 Prius Main Forum' started by charleslo, Jul 11, 2010.

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  1. charleslo

    charleslo Junior Member

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    I'm considering buying a used 2010 prius in California (pls see priuschat.com/forums/dealers-pricing/82314-help-used-2010-prius-purchase.html)


    What is the tax consequences if:

    a) i tell DMV that the price is $1? This is what i can think of
    - I would be "gifting" $29 999 to the seller. There is only $13000 gift tax exemption per year. the seller would be taxed.
    - Would I be taxed on for receiving the (FMV - $1) for the car as gift since $1 is unreasonably priced?

    b) i tell DMV that the price is $10k. Then:
    - I would be "gifting" $13000 to the seller. Then he will not be taxed
    - I would be taxed on $10k for used tax. What's the rate?
    - Would I be taxed on for (FMV - $10k) for the car as gift?

    I want to get the total cost of the car including all the taxes to determine if the deal is good. i admit this thing is getting more complicated than I thought and I'm inclined to just purchase a new prius. Please do help me out here!! Anyone of u have had any experience of buying a used vehicle that still has lots of values? Last thing I want is IRS come and knock on the door saying I'm evading tax.

    Appreciates it!

    -Charles
     
    #1 charleslo, Jul 11, 2010
  2. Tickwood

    Tickwood Active Member

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    DMV will not blindly accept a figure that is not realistic. If they don't believe what you say they will use their own figure, and you lose.
     
    #2 Tickwood, Jul 11, 2010
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  3. dtuite

    dtuite Silverback

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    There's been at least one other thread on this question. Search on "fraud."
     
    #3 dtuite, Jul 11, 2010
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  4. rrolff

    rrolff Prius Surgeon

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    Bottom line - if you buy from a private party, you will state whatever purchase price you agree on.

    I would not go crazy low - but you have a lot of leeway. As long as you both agree on the price, and it is not far far off - you should be fine.

    I've bought 10 cars in my life that way in CA......... $1 is not a good idea...
     
    #4 rrolff, Jul 11, 2010
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  5. Tech_Guy

    Tech_Guy Class Clown

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    Over the years I've done "a lot of business" with the CA Franchise Tax Board and the IRS. These government agencies do a lot of dumb things, but they are not totally stupid. If you try to scam the FTB (or IRS), you will get yourself into a lot of trouble. With tax revenues being very low these days, the FTB and IRS spend a considerable amount of effort investigating unusual tax exempt claims. Remember this - when dealing with the government, you are guilty until proven innocent.

    Good Luck,

    Keith
     
    #5 Tech_Guy, Jul 11, 2010
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  6. TonyPSchaefer

    TonyPSchaefer Your Friendly Moderator
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    I am closing this thread but not removing it. It is illegal to misrepresent the cost of a taxable item.

    Priuschat will not serve as a launching pad for such endeavors.
     
    #6 TonyPSchaefer, Jul 11, 2010
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