Buying a car below "Fair Market Value" in PA

meanjoe75fan
Thu, 03 Apr 2014 23:36:38 +0000
General Discussion

Recently, i got the chance to buy a car that a FOAF was intending to get rid of as “scrap.” 2004 Tribute, 102k mi. It had been sitting for several months–bad COP led to melted pre-cat led to blocked main cat, leaving it in “not drivable” condition.

I paid $500 to out-bid the “strictly scrap” haulers on the basis that it sounded (sight unseen) flippable. Turned out, it was, and is running well (likely I’m about $1000 into it at this point.)

Blue book is roughly $5700, and PA made me fill out a form “MV-3” because I bought it at <80% of Blue Book. PA says they can audit, and charge FMV*0.07 tax if they don’t believe me. I saved some receipts, and some of the used parts pulled.

Anyone have experience with buying cars below book? Preferably in PA, but really any US advice is appreciated. What’s the chances of getting hit with a tax liability?

34 posts - 13 participants