I won a 2011 car which I’m hoping to sell to the dealer who will be getting it for me. I’m told by many that, by taking title without even starting up the ignition, “my” car will be considered used. This makes no sense to me. Is there an explanation?
When the MSO (Manufacturer’s Statement of Origin) is transferred from the dealer to the first buyer and titled by the DMV, it is no longer a “new” car. Check your DMV and state auto dealer’s association for more information.
The term “used” has more to do with how many people owned the vehicle than whether or not it has been driven. That’s why many dealers now call them “pre-owned.”
If you take title, it’s “used.” There’s no way to get around it.
You’re not going to get MSRP for the car.
[b] Wow, You Want To Have Your Cake And Eat It, Too.[/b]
You had nothing and now you’re looking at having several thousand extra dollars. Take what the dealer will give you or take the car and sell it on your own.
Oh, and one more thing, remember to budget for the taxes you’ll be paying on your prize. You can’t win for losing. Lucky You ! Enjoy it.
CSA
Thanks, I wouldn’t have known to call DMV or the dealers’ association. Wouldn’t have thought there is an association. I’ve never bought a car. A suggestion that’s come up is to sell to the dealer without my taking title (“constructive ownership”). Do you think I’m correct in supposing the assn. will know if this is permissible under law, yes? I can’t think of a reason a dealer would object and I’m told it would be to my advantage – a simpler process and no loss of value as a “used” car that’s never been driven. I’d appreciate any further comment you may have.
Ha, so that’s just the way it is…Yes, I’m aware I won’t get MSRP…Ever since “pre-owned” came into the lexicon, I’ve sneered at the marketing gibberish. It’s not as though many “pre-owned” cars haven’t been put to use.
That’s not to say you shouldn’t get a good price for the car. It will be, for all intents and purposes, new, it just can’t be titled that way to a subsequent owner.
Surely there’s a buyer willing to overlook this for the right price.
I don’t know if people who reply to questions actually make return visits, but here goes: I should be enjoying it, it should be fun, but I’m not having much fun over this. I’m trying to set aside all my what-ifs, but…
A few friends are of your mind – take what I get and enjoy it as a gift that fell into my lap, which makes good sense. I don’t want to be greedy, but I also don’t want to be completely laissez-faire and forgo thousands that may be reasonable and proper for me to expect. For example, I’ve already been told my 1099 form will show $50,425 as my income. That is $5,000-7,000 over the MSRP for the basic models of the vehicle, a 2011 GMC Acadia Denali. I’ve been told by an accountant that IRS will accept as income what I actually get from selling as long as I have the paperwork as proof. However, if for some reason I get stuck paying income tax on the $50,425, I do want the car to have been truly of that MSRP amount. My contact at the promotions company is supposedly going to locate an area dealer who wants to buy from me, in which case I’d have the dealer choose color and options.
I’d welcome thoughts from anyone here. I hope the three of you, CSA, TwoTone and MCParadise, come back.
I think your accountant is right, as long as you have the complete paperwork trail you’ll pay income tax on what you actually recieve. The $50k number is a default number they’d use if you have nothing else in writing.
Thanks, MCParadise. We’re here at the same time. I’ve been told that a dealer must let a prospective buyer know it’s “used,” but would explain the circumstances. If I am required to take title rather than sell under the custom of constructive ownership, it will cost me, but I can live with that. I’m not looking a gift trucklet in the mouth. The car is a 2011 GMC Acadia Denali. Even the name is big. When I sat in it upon winning, I felt like a marble rolling around the bottom of a galvanized bucket.
Are you able to see the responses from other people and what I write back? Since you’re a frequent flyer here, I gather that you’re knowledgeable. Anything else you may car to say will be helpful. As a New Yorker, I’ve never bought or owned a car.
That’s great. Each time someone concurs on how to handle with this when I file next year, I feel more comfortable about it.
This forum is wonderful. Here, and in my earlier topic, “Won 2011…,” where I posed other questions, people are knowledgeable and helpful. People are wonderful.
Texases, I’ll say the same to you as I did above to MCParadise. If you have the notion, please comment on anything here.
I think you can go to edmunds.com and see what the MSRP is, so long as you know all the option packages that are on it. That may explain the difference between MSRP for a base model you see and the one you are actually getting.
That said, as texases noted, a valid bill of sale at a lower price should be accepted by the IRS as the amount of income you received from the transaction. This information would displace the 1099 information that the promotion company is required to provide you. Next year, I would attach a copy of the bill of sale to my tax return, but discuss with your accountant or tax advisor.
The more I think about the taxes, the stickier it could get without complete documentation. You’ll not only need to show a complete record of the transactions involved, you might also need to document the fact that you put zero miles on the vehicle. Otherwise, the IRS could claim you got some period of use from the car, meaning the MSRP might apply rather than the value you get on sales. As jayhawkroy said, your accountant/tax advisor is the real authority.
I get what you’re saying, but the stumbling block is that I don’t know what I’m getting – whether the dealer I’m set up with has a model I’d accept or whether I’d be ordering from scratch. This is what’s muddying my mind. I want a car with options that add up to (or extremely close to) the MSRP I’ll be getting on the 1099 ($50,425). I don’t know what a dealer has in stock and, if what’s in stock has a lower or higher MSRP, I’ll need to order from scratch. If the particular dealer is going to buy from me, great, he can choose the options he wants. But where does that leave me if he doesn’t want options? I guess it’s not the worst thing, since IRS will accept the amount I get when all is said and done.
I can easily add on more questions and what-ifs right here, but I’ll spare you.
I’m told that I should get MSRP for everything as well as dealer invoice prices for everything. Someone at my original topic, (Won 2011 GMC Acadia Denali. Must sell.), gave me a website to find invoice prices for options: http://www…rim=denali
I’ll keep signing back in here hoping you’re up for passing along additional wisdom, guidance or information.
I’m still baffled by the contest runners not offering an “or cash equivalent of…” clause in the contest.
That’s a good question. I’ll run it by an accountant.
Please clarify. When a used car is sold, the mileage is recorded somewhere in the transaction papers?
It’s not an option. They have the option to offer cash instead, but it’s not my call. From what I was told, they aren’t going to come around to a cash offer. I probably would be happy to accept a lesser cash sum over what is for me a hassle.
Honestly, I’d walk away if possible. You’re going to boost your income by $50,450 in “unearned income”, have to pay taxes on the total taxable income, have to pay taxes and fees on the prize, and then be stuck trying to private-sale a Denali in a terrible economy with gas rapidly approaching $4/gallon. You just may take a financial bath.
Yes, at least here in Texas you write down (and swear to, in effect) the miles on the odometer. So there is a clear written record.
I bet the dealer will buy it for a price adequate to cover taxes and still leave a decent amount left. Easy for me to bet, I know…