If you buy a car and make a profit for examle you bought a car for $4000 and then a month later you sold it for $4500...how do you account for this on your federal tax return? Usually a car depreciates....does anybody know?
2007-12-15 10:43:11 · 4 answers · asked by BobWhite 2 in Business & Finance ➔ Taxes ➔ United States
If this was purchased as a personal investment or for personal use, it is a capital gain and goes on Schedule D.
If you are running a business (such as a used car dealership), it goes on Schedule C.
2007-12-15 10:48:41 · answer #1 · answered by StephenWeinstein 7 · 2⤊ 0⤋
If you made a profit on the sale, you are required to report it on a schedule D and pay taxes on the $500 profit in your example. This is whether you bought it for investment or just for your personal use. As you say, most of the time a car is sold for LESS than you paid for it, so this doesn't come up real often.
2007-12-15 12:03:44 · answer #2 · answered by Judy 7 · 0⤊ 0⤋
Unless you used the car for business purposes, you don't have depreciation (which increases your gain anyway).
If you buy for $4000 and sell for $4500 a month later, report the sale as a short term capital gain on 1040 schedule D.
2007-12-15 10:50:04 · answer #3 · answered by Anonymous · 0⤊ 0⤋
how about not telling them?
2007-12-15 11:31:03 · answer #4 · answered by Anonymous · 0⤊ 3⤋