If you won, would you take a genuine '65 Sheby GT 350H or $100,000 in cash?

[Cannoball888]

If you won, would you take a genuine '65 Shelby GT 350H or $100,000 in cash?

I'd take the Shelby because you could sell it for more than $100,000

Raffle tickets from:
http://www.stop-als.org/wincar.aspx

 

[jes72mustang]

I would definately take the GT350H. RIght on the link there it lists the estimated value of the Shelby at $225,000.00. Besides then I would have the coolest car in car club hands down. It would take an act of God to make me sell it.

 

[Y2K4 STANG]

Id diffenetly take the Shelby!

 

[67topless]

Shelby!

 

[BDT 1967]

If i had the money i would, as a matter of fact i wouldnt even think about it. Give it another 10 years that car will be worth more than your life.

 

[Max Power]

Id take the car, but sell it right away. Imagine the IRS bill.

 

[stangkid88]

take the shelby, no doubt

 

[zookeeper]

Id take the car, but sell it right away. Imagine the IRS bill.

You brought up something I've been wondering about for years. When you sell a house, you have to pay capital gains tax. I know you're supposed to report capital gains on anything of value (art, stocks, any collectables) and I assume this applies to cars as well. But I have yet to have my tax guy even ask about it, so I assume you could get away with a car or two per year and not raise any red flags with the IRS, but does anyone know for sure? Personally I've yet to actually make money on any vehicle and I don't see the IRS offering me a refund on losses, so they can go fly a kite while they wait for me to 'fess up if I ever actually make money on a car, but still...

 

[RedGTvert]

You brought up something I've been wondering about for years. When you sell a house, you have to pay capital gains tax. I know you're supposed to report capital gains on anything of value (art, stocks, any collectables) and I assume this applies to cars as well. But I have yet to have my tax guy even ask about it, so I assume you could get away with a car or two per year and not raise any red flags with the IRS, but does anyone know for sure? Personally I've yet to actually make money on any vehicle and I don't see the IRS offering me a refund on losses, so they can go fly a kite while they wait for me to 'fess up if I ever actually make money on a car, but still...

It all depends on what you sell, for how much and exposure. I ran my 70 Mach through B-J and it brought a very handsome sum. Rather than risk the ire if the IRS, I elected to pay the 15% cap gains taxes, but did get to deduct every penny, including gas.

The problem with this deal, is even though the car may be worth $100K, the party has advertised a value of $250K and you will have to pay taxes based on $250K. The question comes up, can you afford to pay the government their share on stated value of $250K?

 

[Max Power]

Actually, the IRS can be a but forgiving (did I just say that?) on declared values. If you recive the car as a contest prize, it is 100% capital gains, but if you sell it at Barrett-Jackson without ever using it or modifying it, I am about 99% sure you can pay gains on the sale amount rather than the declared value.

A declared value is an estimate, a legit sale price is the actual value. Of course you can't sell it to your wife for $3000 and expect to get away with it, but ebay or Barrett would probably be acceptible.

 

[302 coupe]

only accept cash as payment. Anybody that can get a loan or write a check can pay just as easily with cash. Handover the title, drop the insurance, make several small deposits to get the cash in the bank, IRS is none the wiser. Obviously, if everybody did that, there might be a problem. But for the casual car guy that only sells a handful of cars in his lifetime, I don't see a problem.

You're already paying income tax, then sales tax on your purchase, then ad valorem tax, so to me paying a capital gains tax on the re-sale is just ridiculous.

 

[69 Rustang]

Let's assume it is worth $250K. You win it, then sell it to pay the taxes. Worst case scenario puts you at near 50% taxes. The net would be $125K, better than the cash which you would have to declare and pay taxes on too.

I would take the Shelby and try to figure out how to keep it...

 

[chepsk8]

H

 

[Max Power]

only accept cash as payment. Anybody that can get a loan or write a check can pay just as easily with cash. Handover the title, drop the insurance, make several small deposits to get the cash in the bank, IRS is none the wiser. Obviously, if everybody did that, there might be a problem. But for the casual car guy that only sells a handful of cars in his lifetime, I don't see a problem.

You're already paying income tax, then sales tax on your purchase, then ad valorem tax, so to me paying a capital gains tax on the re-sale is just ridiculous.

If the car is a prize, technically he is not paying sales tax or capital gains, just income tax. If it was a gift from a family member, then it would be capital gains, and that is a whole different set of rules. If you actually bought it, then it would be sales tax only. There is never a situation where you would pay more than one of those taxes. Where on earth did you get that idea?

While I am not terribly researched on large cash transactions, I do know that the govt. tracks all transactions over $10,000. While your buyer may be able to get $250k in cash, most will not have it already out of a secured facility, and to remove it in increments of less than 10k at a time in increments that don't set off alarms would be difficult.

 

[zookeeper]

H

I

 

[69 Rustang]

I

J?

 

[RedGTvert]

Actually, the IRS can be a but forgiving (did I just say that?) on declared values. If you recive the car as a contest prize, it is 100% capital gains, but if you sell it at Barrett-Jackson without ever using it or modifying it, I am about 99% sure you can pay gains on the sale amount rather than the declared value.

A declared value is an estimate, a legit sale price is the actual value. Of course you can't sell it to your wife for $3000 and expect to get away with it, but ebay or Barrett would probably be acceptible.

If you received a car like this as a contest prize, it is not a cap gains, because you didn't start with anything, it would be income tax as stated above.

The income tax rate is much higher than any cap gains. You can sell it for whatever price you get, but you will still have to pay the income tax on it based on declared value. You may be able to negotiate with the IRS on actual cash value, but the key word is TRY.

 

[Hissing Cobra]

I'd take the 100K and then pay my house off. I'd be 38 with NO mortgage living up here in the highly expensive Northeast. I'd still keep my job though and put 80% of my pay into my retirement. I'd then buy a '66 Fastback and build it into a clone of that car for 40-50K. It would have a 336/Tremec combo with 4.30 gears and would be good for 11's. I'd then beat the crap out of it whenever I got the chance. I'd have the look of that car but the power would be a LOT different! LOL!

 

[rebel65]

amen aaaamen!!!! sing it brutha

 

[spyne]

The IRS is going to want roughly 35% - 40% of whatever you get. Been there, done that. If the car is valued at $250,000 then you'll have to pay $87,500 in taxes (at 35%). If you take the $100,000 cash, you'll pay $35,000 in taxes (again, at 35%). Plus, if you take the cash you'll actually have the money to pay the tax which you probably won't have if you take the car (at least I woudn't). Also remember that this will be added to your current salary as income for the current year. Unless you are currently making $250,000/year or more this is going to put a serious hurt on you tax wise.

You may be able to tweak these numbers a bit, depending on your personal circumstances and the creativity of your accountant, but the bottom line is that unless you have $80,000 or more in available cash to pay the taxes you're probably better off to take the cash instead of the car. I'm not a tax expert, so it may be possible to take the car and sell it quickly enough to make it worth your while, but my guess is that's a gamble.