Buying and selling a race car

MARXICO

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I am curious to see what others experience in selling and buying race cars are .Are people using cash or checks? My last car I traveled 400 miles it was a Saturday and banks were closed I didn’t expect them to take a check so I brought cash the seller freaked out because he didn’t want that much cash on hand but I wanted the car with no delays for a check to clear .

I would like replies from people who have experience with this type of transaction and not from a key board racer within opinion.

I have no problem with waiting for a check to clear but I don’t want to pay 30%tax on something I have paid cash for, so do I incorporate the tax and play a barter game? The selling price would be significant enough that I would have to pay capital gains if declared. Am I expecting too much to think the buyer will pay cash? What are some of your experiences?
 

burninfuel

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everything has been cash, racecars, hotrods, boats and usually up to $45k
 

Jessaca

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I drove from N CA to Phoenix to buy a race car. I took cash. The guy wasn't happy about that much cash. But, I didn't want to do a cashiers check. I would of had to have it made out to him and if I didn't buy it, would of been a pain to cancel.

I bought a prerunner a few weeks ago. Paid cash also. I took my with drawl receipts so that he could see it was legit. Some of the people were worried the $ might be fake.

When I have sold cars, I would never take a check. Too many scams.


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Mark Newhan

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Used to be cash was king. Somehow it's seen as "dirty", and it sucks that criminals have made our currency less than cool.
 

Robin Hood

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I am curious to see what others experience in selling and buying race cars are .Are people using cash or checks? My last car I traveled 400 miles it was a Saturday and banks were closed I didn’t expect them to take a check so I brought cash the seller freaked out because he didn’t want that much cash on hand but I wanted the car with no delays for a check to clear .

I would like replies from people who have experience with this type of transaction and not from a key board racer within opinion.

I have no problem with waiting for a check to clear but I don’t want to pay 30%tax on something I have paid cash for, so do I incorporate the tax and play a barter game? The selling price would be significant enough that I would have to pay capital gains if declared. Am I expecting too much to think the buyer will pay cash? What are some of your experiences?
Where does the 30% tax come from? How much money are you gonna make buying a race car? Get a bill of sale if you need a cost basis and pay cash.

What's wrong with wire transfer, cashier check, etc.
 
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Mark Newhan

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Where does the 30% tax come from? How much money are you gonna make buying a race car? Get a bill of sale if you need a cost basis and cash.

What's wrong with wire transfer, cashier check, etc.
I'm thinking he doesn't want to pay income tax.

He won't have to pay income tax. The cost of buying or building a race car is usually done with after tax money. The despoit of the proceeds of a sale should be easily documented.
 

oldschool5er

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All cash transactions for me for the several I have sold and bought. I just purchased one a few months ago out of state, I had an advocate in the area so we wired the funds to him and he handled the transaction in cash and made sure it was loaded on the carrier. I have not had issues in cash transactions but I also am careful about getting documentation on what I am buying. Selling is easy if you bought them with good paper.
 

MARXICO

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To be more clear If I receive a check of 5 figures and run it thru my checking account I now have to declare that income on next year’s tax return .I don’t want to set off any red flags by itemizing my expenses over a couple of years that is truly not a business related expense. I use the 30% number because that is what rate my business is taxed at, if I want any write offs I have to show receipts that are related to my business not my hobby.


One again I am asking for experience rather than theory, like many I lied to the DMV about the purchase price when registering the car so the itemizing detail becomes a loss, although I have plenty of parts receipts to offset the purchase price .To streamline my question ,is it asking too much to expect someone to pay in cash

Also any money that goes thru my business account reflects on the annual cost of my general liability, so that is also a hidden cost

, The selling price will be over $80.000
 
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Dlock5

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Not to be a smartass, but couldn't you just ask the seller if cash is ok before you make the trip?.

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MARXICO

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It becomes a dance with every caller it is different story, I don’t want to scare a potential buyer away with a cash or a taxed price because every ones situation is different .Do you think that someone that pays over 100 grand in cash tells the DMV the actual purchase price. I have never sold a car for cash that the purchaser didn't asked for a smaller amount on the bill of sale.
 

swiftracing5

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I've done cash and money order for the last 2 race cars I sold. I'd rather not give out bank account info for a Wire transfer or PayPal, and don't always trust a big check I guess. Every time I've posted a car I get overseas fake accounts asking for electronic info so I just don't trust it. Cash is still king imo.


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Mark Newhan

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To be more clear If I receive a check of 5 figures and run it thru my checking account I now have to declare that income on next year’s tax return .I don’t want to set off any red flags by itemizing my expenses over a couple of years that is truly not a business related expense. I use the 30% number because that is what rate my business is taxed at, if I want any write offs I have to show receipts that are related to my business not my hobby.


One again I am asking for experience rather than theory, like many I lied to the DMV about the purchase price when registering the car so the itemizing detail becomes a loss, although I have plenty of parts receipts to offset the purchase price .To streamline my question ,is it asking too much to expect someone to pay in cash

Also any money that goes thru my business account reflects on the annual cost of my general liability, so that is also a hidden cost

, The selling price will be over $80.000

If you're desposting a check, it doesn't trigger the IRS. Cash deposits of $10,000 do. If a buyer gives you a check, it will be its own proof of funds. Check with your tax preparer, but I don't think you have anything to worry about.
 

D-rek

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I have done cash and wire transfer (same bank)


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vegasloki

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Cash though only up to about $20k in a race car but it's been with either someone I knew or someone I knew of in the racing world. An $80k purchase is steep in an all cash with an unknown buyer. I wouldn't do it. It's going to trigger IRS cash disclosures on both ends when he gets the money and then again when you deposit it. That in and of itself though shouldn't be a big deal if you are on the up and up. We've done more than $80k but it's been wire transfer to a holding account. When it arrives it's transferred to one of the other accounts. If the buyer is reputable you can do a cashier's check or wire transfer. First thing I would do is check them out. For $20-50 online you can run a background check. As for declaring the income talk to your tax guy. If you don't have one go see one and ask. Depending on your situation there are different options but it's likely not going to be a 30% hit if any at all. No one on a forum is going to be able to give you the kind of tax advice you need without knowing a whole lot more about your financial situation than you'd want to let be known on an anonymous forum.
 

Big Whitey

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Sounds like you are making to big of a deal out of it. If you sell then you discuss how you want your money. If you buy then you still discuss how you want to handle the money. Each of you deal with your tax issues as you see fit. I just bought a prerunner and paid both check and cash
 

Kolman

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I happen to be a CPA, located in Las Vegas, and I have dealt plenty with owners buying personal toy cars through their business. As long as you do it correctly there will most likely be no tax burden. Especially considering the costs of building and keeping these cars running.

If you need advice, feel free to DM me, always willing to help out RDC members. We specialize in complex tax situations and take care of Fortune 500 CEOs and Presidents, so we should be able to handle anything RDC can throw at us.
 
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johndjmix

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I had a great experience buying our truck. Did a bank check for a good part of it when he dropped it off, then paid him the rest of it 6 months and 2 races later. Got a great truck and made a good friend in the deal.

I am greatfull for the trust given to me that the remainder of the money's would be paid. I have found that trust echoed throughout the off road racing community. And let's face it - if someone screws someone over ... everyone knows everyone, so good luck for them to buy anything else.

--John




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tapeworm

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Always cash and get the maker View attachment 181990


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The marker is no good. It'll only let you know if it's the correct paper. People that wash and reprint bills will still get passed that special marker. So the person washing the print off of one dollar bills and reprinting them with the 100 dollar bill will still pass that marker test.


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motoman29

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I deal in cash transactions buying and selling vehicle and equipment regularly. If it seems off, don't proceed. Using your best judgement is a powerful thing.
 
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