Safest way to accept payment in a car sale - Lateral-g Forums

CamaroMike · #1 05-12-2014, 07:33 AM

Quote:

Originally Posted by GregWeld

You should be able - however - to show receipts etc for the car and it's parts - and that you sold it if asked down the road (as in 5 years from now).

Would bill of sales be adequate?

I was a teller not long ago and we just enter the stuff in the computer and send it off to be processed, it take a few days to clear funds from checks. If you think about it a check is a piece of paper with writing on it.

**GregWeld** · #2 05-12-2014, 07:42 AM

Quote:

Originally Posted by CamaroMike

Would bill of sales be adequate?

Bill of sale is proof that you bought or sold... but you still need supporting documents to show "LOSS" or "ADJUSTED COST BASIS" if you need to prove you did not profit from the sale.

So you buy a car for 10K - and get a bill of sale for that transaction.... now you just need receipts to show that you spent an additional 40K on paint and motor and wheels and interior... so your ADJUSTED COST BASIS is now 50K and you sold the car for 45K.

Don't try to write it off as a LOSS --- it's not a commercial transaction if it's just your personal car etc.

All of this is only going to come into play in an audit. An audit would be triggered by making a mistake on your return -- or that you're claiming some large loss etc that isn't ordinary... or maybe they just draw your number. Then they'd only be going over your bank accounts if you're kind of sleazy and they don't like what they're seeing - or your stuff just doesn't "add up".

Typically when I've been audited - they are asking for documentation to back up a single issue... I've never been audited where they asked me to bring in all my paperwork etc. My tax filing last year was 184 PAGES long.... so there's just a few transactions to report etc. So to be asked about ONE specific transaction is quite remarkable. However, I'm as honest as the day is long and have every piece of paper EVER since my very first paycheck and the receipts and bills for my very first electric bill payment. So I'm never afraid of being audited.