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Dieselgate - VW Group Emission Scandal Discussion around the VW Dieselgate Emissions scandal. Details and news updates can be viewed here: http://forums.tdiclub.com/showthread.php?goto=newpost&t=448336 This forum is a work in progress depending on requirements, usage, etc.

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Old July 11th, 2017, 08:20   #1
upfisk
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Default Tax consequences of buyback?

Just sold back our '11 Golf TDI. The buyback representative suggested we speak with a tax lawyer on how to claim the $5771.73 restitution payment. So is this Capital Gains, income, how does it get categorized on taxes? Did anyone bother filing this money on their taxes?
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Old July 11th, 2017, 15:54   #2
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I am not a tax guy, so if this is capital gains, is it like capitol gains on real-estate. If you sell your home for more than you purchased it for, but then purchased a more expensive home after the sale of the 1st home. No capitol gains is due. So if you purchase a new vehicle that costs more than what VW gave you on the sell back, is no tax due? From what I understand from talking with the VW lawyers last year, VW is not reporting what they are giving us for our VW's to the IRS. I am sure they are writing off something though.
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Old July 11th, 2017, 16:22   #3
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The last thing I would be concerned about is taxes. It is unlikely that more than a very small percentage actually show a real gain on this transaction and likely that almost no one who did will document it.
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Old July 11th, 2017, 18:05   #4
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I am shocked that they told you this... unless of course you asked.

I wouldn't worry about it, unless you know you are getting audited.
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Old July 12th, 2017, 04:24   #5
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Quote:
Originally Posted by Mark_J View Post
I am not a tax guy, so if this is capital gains, is it like capitol gains on real-estate.
Real estate (specifically, your home--other real property doesn't count) has some special rules in place that used to be as you describe, but those rules don't apply to any other type of property. No, VW isn't reporting anything as far as payments to owners are concerned, but that doesn't have anything to do with whether they're taxable.
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Old July 14th, 2017, 04:55   #6
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Thumbs up One more good reason to do the emission modification

Modification = $6,701.53

BOSCH = $350

Plus NOT needing to buy a new replacement car TT&L = $1,000-ish

$8051.53-ish

No worries, Tax free

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Then there is this value of the 11 year, 162,000 mile warranty ~~ which I personally value at $3,000

GAD
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Last edited by 2015vwgolfdiesel; July 14th, 2017 at 04:59.
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Old July 14th, 2017, 07:32   #7
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I doubt if any of us will receive a 1099 form from VW. But now I have to visit the DMV and explain that I haven't owned my TDI since January 30th. I received my registration renewal yesterday for a car that is most likely crushed by now.
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Old July 14th, 2017, 07:42   #8
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Quote:
Originally Posted by TDILeo View Post
I doubt if any of us will receive a 1099 form from VW. But now I have to visit the DMV and explain that I haven't owned my TDI since January 30th. I received my registration renewal yesterday for a car that is most likely crushed by now.
Okies can file a paper with the DMV stating they do not own the car.

However there is a $10 fee ---
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Old July 14th, 2017, 07:46   #9
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I doubt if any of us will receive a 1099 form from VW.
There's no reason to guess or doubt; it isn't happening. Plenty of us sold back cars before the end of last year, and there are no 1099s.
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Old July 14th, 2017, 16:36   #10
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Quote:
Originally Posted by Fourplay View Post
If you sell 1 or 2 personal vehicles, you're probably fine. As someone doing this as a business, I have reported all profits.
There is concise wisdom in this quote ^^

Below is from IRS Publication 550,
https://www.irs.gov/publications/p55...blink100010478

Capital Assets and Noncapital Assets


For the most part, everything you own and use for personal purposes, pleasure, or investment is a capital asset. Some examples are:
  • Stocks or bonds held in your personal account;
  • A house owned and used by you and your family;
  • Household furnishings;
  • A car used for pleasure or commuting <end quote>

Personal use property. Property held for personal use only, rather than for investment, is a capital asset, and you must report a gain from its sale as a capital gain. However, you cannot deduct a loss from selling personal use property. <end quote>

So, according to the tax code, even a $100 gain on one car is taxable. Ten cars flipped for $100k profit would certainly be taxable.

If you are audited, will you be massively fined or imprisoned for not reporting a gain on one car? I suspect not. But be aware you are not abiding by the law.

Should flippers think twice about not declaring their gains? I think so. Also, there is no limit to the number of years the IRS can look back if they suspect or discover tax fraud. Forever is a long time to be looking over your shoulder.

Not trying to scare anyone. I just personally never want to be on the wrong side of the IRS, and knowledge is power.

Last edited by Trade Wind; July 14th, 2017 at 16:38.
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Old July 15th, 2017, 04:45   #11
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^^^^^^^^^^^

IMO

The staff of gov (IRS) members lean left ~~ as in greens ~~ as a "group set."

IMO

If a "flipper" came on their screen, ~~ Katie bar the door.
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Option A to take BB ~ $25,625
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Have 3 nibbles at $5,000 off on new 2017 Golf gassers ~ delivered to driveway
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Old July 15th, 2017, 06:35   #12
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This topic of tax liability cries out for a sticky. There isn't really much to know here, and it's been stated over and over by knowledgeable folk:

1. There is no tax liability unless the buyback amount exceeds the cost basis in the car.

2. There have been no 1099s issued by VW, nor is there the slightest reason to anticipate that they will send any.

3. Tax liability is in no way eliminated by the fact that no 1099 is issued or received.

It is therefore blindingly obvious from this what any prudent person would do. Of course, there are always going to be people who will try to game the system, but no matter the hand one holds, the IRS always has the trump cards.
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Old July 15th, 2017, 06:45   #13
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Originally Posted by TDILeo View Post
I doubt if any of us will receive a 1099 form from VW. But now I have to visit the DMV and explain that I haven't owned my TDI since January 30th. I received my registration renewal yesterday for a car that is most likely crushed by now.

I sincerly doubt it is crushed yet, unless the condition is beyond redemption.
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Old July 17th, 2017, 07:18   #14
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Quote:
Originally Posted by Rico567 View Post
This topic of tax liability cries out for a sticky. There isn't really much to know here, and it's been stated over and over by knowledgeable folk:

1. There is no tax liability unless the buyback amount exceeds the cost basis in the car.


2. There have been no 1099s issued by VW, nor is there the slightest reason to anticipate that they will send any.


3. Tax liability is in no way eliminated by the fact that no 1099 is issued or received.


It is therefore blindingly obvious from this what any prudent person would do.


Of course, there are always going to be people who will try to game the system, but no matter the hand one holds, the IRS always has the trump cards.

If the IRS says you owe it -- you owe it

But,


Bundling "cheaters" along with persons who file tax forms "incorrectly" is a reach. IMO there are few persons on earth who really understand IRS tax law

My only opinion about persons who did multiple buys and sells back to VW (like 20 units)were in fact schedule C filers. Or should be.
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The FIX ~ Love 162,000 ~ Love NADA-KBB Future Resale value & DSG - TDi
Option A to take BB ~ $25,625
Option B The FIX ~ drive it 3-4 more years ~ CURB it for more than I paid for it
Have 3 nibbles at $5,000 off on new 2017 Golf gassers ~ delivered to driveway

Last edited by 2015vwgolfdiesel; July 17th, 2017 at 07:51.
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Old July 17th, 2017, 16:53   #15
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Quote:
Originally Posted by 2015vwgolfdiesel View Post
If the IRS says you owe it -- you owe it

But,


Bundling "cheaters" along with persons who file tax forms "incorrectly" is a reach. IMO there are few persons on earth who really understand IRS tax law

My only opinion about persons who did multiple buys and sells back to VW (like 20 units)were in fact schedule C filers. Or should be.
If they established a business to do it through, then yes, they would be. If they've done it without establishing a business, it would be capital gains on Schedule D.
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