Won A Car...Questions ????

[inspiringmind]

What is the name of your state? Wyoming

I won a car in a sweepstakes. Now the major issue is that I don't have the money to pay the taxes/title/registration on it. I know I "could" take out a loan, but without a clear title for collaterial I am back to square one. (and I don't have good credit.) As for taxes I don't have any state taxes, but federal taxes would be 33% and after my deductions I would have to pay about $26,000 for this car.

Now I do have someone willing to pay the sales/title/registration taxes for me and then buy the car outright from me once the title is in my name, but my question is if I did that wouldn't I still have to pay the 33% of the value of the car when I had it signed over to me? Or would I only pay taxes on the amount that I sold the car for? (Of course I wouldn't be selling the car at Approximet Retail Value.) Would I have to pay taxes on the car's value and the money I got from selling the car?

Second question: Cause I don't know where else to put this:

Can the dealership buy the car from without tranferring the title to me and me having to pay all the taxes? (It just seems strange that I would have to pay about $7,000 on title and taxes and registration, when less then two seconds later I would sign it back over to them and then get a check from them for whatever they bought it for (which would be WAY over $7,000))

I know someone probably is going to say consult a lawyer or an accountant, but I don't have the money to do that either.

 

[Zigner]

Have you asked the sweepstakes people of they would offer a cash payout instead?

 

[inspiringmind]

Rules say....

Have you asked the sweepstakes people of they would offer a cash payout instead?

The rules state that there is no cash option right up front, but that the sponsor COULD substitute the car with something of equal value. It could be another car, it could be cash. (I am only wishing and hoping that they would call me and say would you like to take some cash instead...that would make it SO much easier!)

 

[LdiJ]

You have to include in your income, for federal tax purposes, the fair market value of the car. That does NOT mean the retail value of the car. That means the fair price at which you could sell the car, which would likely be much less than the retail value.

 

[abezon]

The fair market value is for an undriven car. If you take possession & sell the car a week later, it's a used car & worth less than you paid. I suggest you sell it without ever taking possession. That is also your best evidence of the car's true FMV. Since the company will report the retail value, you had better have excellent proof if you want to claim less as income.

Check with the state license bureau about short-term ownership or getting a reseller's license for just one car. The fees may not be worth it.

Another option is to sell the rights to collect the car to your buyer. You both go to the dealership & title is transferred directly to his/her name.

Maybe you could get the dealership to substitute two $40,000 2006-model cars for the one you won? You could sell just one & keep the other. Or at least take your time selling the second.