2014 Wagen
Member
From reading a little bit (I'm not a CPA), looks like any profit from the buyback (greater payment than cost to buy + eligible additional expenses in the eyes of the IRS) would be capital gains. Would like to see what other members' thoughts are on the matter.
I imagine most people would have bought their cars long ago and wouldn't be getting more than they paid for the car + tax + expenses associated with conducting the buyback (mileage rate to/from the dealer as appropriate).
For those that might end up with more buyback money than expenses... here are my thoughts (personal use, driven as a normal car [not parked the whole time] throughout ownership period):
- Most operating expenses (insurance, maintenance, registration) are not valid expenses (against potential profit) if the car was used as a personal vehicle while owned (might be able to pro-rate if it was put into storage at a certain point in time?)
- It's important to own the car for at least 1 year prior to buyback so it's long term capital gains
- It's important to account for expenses properly and record the capital gains on your taxes, even if your long term capital gains rate is 0%
Edit to add:
Interested to know whether the 'buyback' portion is capital gains (as applicable) while the compensation portion is to be entered on a 1099 misc. Maybe someone around here has the answers? Might explain why the 3.0 settlement reads differently.. who knows.
I imagine most people would have bought their cars long ago and wouldn't be getting more than they paid for the car + tax + expenses associated with conducting the buyback (mileage rate to/from the dealer as appropriate).
For those that might end up with more buyback money than expenses... here are my thoughts (personal use, driven as a normal car [not parked the whole time] throughout ownership period):
- Most operating expenses (insurance, maintenance, registration) are not valid expenses (against potential profit) if the car was used as a personal vehicle while owned (might be able to pro-rate if it was put into storage at a certain point in time?)
- It's important to own the car for at least 1 year prior to buyback so it's long term capital gains
- It's important to account for expenses properly and record the capital gains on your taxes, even if your long term capital gains rate is 0%
Edit to add:
Interested to know whether the 'buyback' portion is capital gains (as applicable) while the compensation portion is to be entered on a 1099 misc. Maybe someone around here has the answers? Might explain why the 3.0 settlement reads differently.. who knows.
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