If my business sells car to my personal self ... Buyback?

czeetah · Jul 26, 2016

My Passat is owned by my corporation.

If the corporation sells the car to me, will I qualify for buyback?

No nothing shady. Whatever car is worth it's sold to me at a FMV

TJD_TDI · Jul 26, 2016

Currently, there is ambiguity about how cars purchased after June 28, 2016 will be treated. I would wait until the final details are out. No rush at this point--if it is advantageous to do this, you should have until the end of the claim period (2018) to do it.

IndigoBlueWagon · Jul 26, 2016

Does the court agreement say no corporately owned cars? Is yours a closely held corporation? Are you the sole shareowner? If so it may not matter, even if they say no corporate cars.

autdi · Jul 26, 2016

CAS settlement uses the word owner, or owners. There is no limitation on the owner, other than it can't be a VW dealership, and a list of specific individuals, and elsewhere included are other dealers, non-VW ones that hold cars on their lots. Other lease companies are indicated to be the owner for buyback considerations, and folks that leased through anyone other than VW credit are excluded. So that would say, companies can do the buyback.

czeetah · Jul 26, 2016

Basically if the corporation makes a profit, it has to be paid to me, thus payroll taxes.

If I personally own the car, no taxes on settlement.

If I can buy the car from the corp at a FMV +/- and still get buyback (even if corp has to get 50% of damage amount) it would be better.

So it's a big deal. If the corporation planned on replacing the car with another it wouldn't matter, but it doesn't as circumstances have changed (much more work from home and less travel)

bizzle · Jul 26, 2016

If you buy the car at FMV and then turn around and sell it to VW for a profit, you will have to declare that as income on your personal taxes.

Even if your corporation keeps the buyback money it would trigger a taxable event since it's been claiming depreciation on the vehicle for the past two years.

The safest and most legal route to retaining the buyback money without triggering a taxable event would probably be to deduct an equal amount from your paycheck into a non-taxed retirement fund.

czeetah · Jul 27, 2016

bizzle said:
If you buy the car at FMV and then turn around and sell it to VW for a profit, you will have to declare that as income on your personal taxes.

Why would that be any different from everyone else who bought one and is making a profit on the buyback? No one else is declaring any moneys as income.

Please don't read that as confrontational - I don't mean it that way. It's just a question

bizzle · Jul 27, 2016

Almost no one is making profit from the buy back. A few might be because they are flipping cars to vw but I suspect they'll just skirt tax law and hope they don't get caught.

Your business presumably already deducted the depreciation so the difference between that and overage from the buy back would generate profit.

You buying it purely to resell it is going to generate profit.

Someone who paid 8k into a loan, gets the car paid off, then ends up with 8k in pocket isn't making profit.

LogicBomb · Jul 27, 2016

czeetah said:
Why would that be any different from everyone else who bought one and is making a profit on the buyback? No one else is declaring any moneys as income.

Please don't read that as confrontational - I don't mean it that way. It's just a question

No one is making a profit on the buy back from the "bought the car new" camp. The buy back amount would have to exceed your original out the door price + all service + all maintenance + insurance premiums + fuel costs + storage costs (if you had any) + registration(s). Any money beyond that total figure, would have to be submitted as "income".

Those that are, or have bought the car in a down market, could possibly end up in a scenario where they would be legally required to declare they money. Not saying they should, or will, just what the law states. But, they too, are able to claim all of the above items as associated costs of owning the vehicle, and might be able to fall within the limit.

TJD_TDI · Jul 27, 2016

LogicBomb said:
No one is making a profit on the buy back from the "bought the car new" camp. The buy back amount would have to exceed your original out the door price + all service + all maintenance + insurance premiums + fuel costs + storage costs (if you had any) + registration(s). Any money beyond that total figure, would have to be submitted as "income".

Those that are, or have bought the car in a down market, could possibly end up in a scenario where they would be legally required to declare they money. Not saying they should, or will, just what the law states. But, they too, are able to claim all of the above items as associated costs of owning the vehicle, and might be able to fall within the limit.

Except restitution is not taxable income. There is no capital gain here.

The only thing to consider is that selling it to yourself now means you only get half the restitution amount.

bizzle · Jul 27, 2016

Restitution is taxable income

More to the point, if he sells the car to himself for 12k and turns around and resells out to VW for 24k that will be a capital gain

If he didn't stand to make a profit he wouldn't be asking how to keep the money tax free. I told him the safest way to keep the money: pull it out of payroll in a tax sheltered method.

czeetah · Jul 27, 2016

LogicBomb said:
No one is making a profit on the buy back from the "bought the car new" camp. The buy back amount would have to exceed your original out the door price + all service + all maintenance + insurance premiums + fuel costs + storage costs (if you had any) + registration(s). Any money beyond that total figure, would have to be submitted as "income".

My purchase amount was $24k, buy back is $28k

I don't think service, insurance, fuel, registration, etc., count towards figuring out if the buyback is a profit. One would have had to pay those with any car they had purchased. Those costs don't go away if one hadn't bought a VW TDI and had purchased something else.

LogicBomb · Jul 27, 2016

czeetah said:
My purchase amount was $24k, buy back is $28k
I don't think service, insurance, fuel, registration, etc., count towards figuring out if the buyback is a profit. One would have had to pay those with any car they had purchased. Those costs don't go away if one hadn't bought a VW TDI and had purchased something else.

They absolutely go towards "cost of ownership", you're more than welcome to check with your local IRS office.

My experience is from helping an old boss of mine sell some of his collector cars. Of which he stood to make a pretty penny, but wanted to make sure the tax man got as little as possible. So I gathered all of his receipts for parts, labor, storage, transportation fees et all, which brought a total profit of over $200,000 to just under $40,000, at least for taxable purposes. Since he sold them at auctions, and not privately, the figures were public and you can bet your butt the tax man watches all of those big car auctions like a hawk.

bizzle · Jul 27, 2016

That's what I suspected the difference would be. You'd have to title it and pay taxes before you'd be considered the owner (talking about vw not IRS) so you'd be lucky to break even.

The 4k goes to you through payroll right? Send it off to an IRA. Why complicate this over a few thousand dollars?

D3R3K · Jul 27, 2016

On the new website it has you select if the car is owned by a business or individual.

Bisoned · Jul 27, 2016

czeetah said:
My Passat is owned by my corporation.
If the corporation sells the car to me, will I qualify for buyback?
No nothing shady. Whatever car is worth it's sold to me at a FMV

Nothing shady as long as FMV is what VW is offering on the buyback. Right?

Seems you would be playing with the FMV amount in order to avoid taxes.... Probably wouldn't be caught, but I don't know. Doesn't seem quite right to me

If my business sells car to my personal self ... Buyback?

czeetah

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