Taxes on car sold to carmax

[Yankees123]

I paid my least for the full contract my lease matures in July so I paid almost 11,000 in payments and carmax paid me 8,000. So I didn’t technically make money.

[Yankees123]

I wonder about that. I think I read somewhere that they don’t send 1099s out. but I could be wrong.

[jeisensc]

So far I haven’t found anyone report they received one.

But as a business owner, they have changed the rules a couple times, but payments by a business to anyone over $600 is technically supposed to generate one (which is sent electronically to IRS).

Not trying to manufacture FUD, but as someone who prepared/sent/audited countless W2 and 1099 transmissions: sure maybe Carmax never sends one, but I can’t believe across every car buying services, no one was ever sent a 1099, ever. Even if it was flagged by mistake.

And once the IRS has it, that’s it, even if you send an amendment after.

[j_e_f_f]

Have also never heard of a 1099 being issued, but even if you were to get one, just cancel out that “income” with negative income of the same amount (corresponding to your cost basis in the car), resulting in zero additional tax liability as mentioned.

[wrangler005]

So many good responses here but if IRS sends you a bill, you’re on your own. I would strongly suggest to reach out to your CPA and let them handle what they’re good at. We don’t know state tax rules, your finances and all.

I recently pocketed $4k after selling my US bank lease to Vroom. I reached out to my CPA and he said he’d get back to me when filing taxes next year as this is the first time this situation arised (making money by selling lease).

[jeisensc]

@j_e_f_f

just cancel out that “income” with negative income of the same amount (corresponding to your cost basis in the car), resulting in zero additional tax liability as mentioned.

assuming you still file long-form (which I do, most don’t)

@wrangler005

if IRS sends you a bill, you’re on your own. I would strongly suggest to reach out to your CPA and let them handle what they’re good at. We don’t know state tax rules, your finances and all.

I recently pocketed $4k after selling my US bank lease to Vroom. I reached out to my CPA and he said he’d get back to me when filing taxes next year as this is the first time this situation arised (making money by selling lease).

my hope is these slide like credit card rewards, but the numbers aren’t immaterial, and the type of transaction (checks, some whose amounts also make them subject to reporting), when in doubt, always always get reported. Everytime I see a check from gmtv or AN I think “hooray for them! and some auditor is going to want matching control totals for every check over $600 ticked-and-tied to the 1099s sent out. Your CPA should be dialed-in, that’s why you hire them.