How should i go about this??? (car gift tax question)

[ilovepunpun]

i am getting a car from a family friend in about a week and i'm not paying anything for the car. How should i explain this situation at the dmv? I know that the state of texas calculates a Standard Presumptive Tax on cars purchased from private sellers. On the dmv website it also states that gift tax is only applied to family members. How do i avoid paying tax on a $25k car thats was given to me as a gift?

[bmoore]

Say your uncle gave it to you. It's not like they ask for proof of relationship.

[guest043013-2]

At a value of $25K, your friend needs to technically fill out a gift tax form. He can only give $13K a year without the gift tax applying. After that, he must either pay a gift tax on the remaining $12k or apply it to his $1 million dollar lifetime exclusion.

(Been worried about the gift taxes with the recent lottery drawings.)

[trynagetlaid]

Why are you worried about the gift tax if the person giving you the car is not a family member? If as you say the car is worth $25K, the county tax office will probably calculate sales tax on about $15 or $20K. Just hand over the signed off title, bill of sale with $10K or $12K as the sale price, and let the county tax office do the rest.

If you pay 8% of $20K in taxes you're still getting a $25K car for less than $2K out of pocket.

[ilovepunpun]

i appreciate the responses but i still seem to be getting conflicting answers.
@tigercat Is it my friend that will have to pay the remainder of the gif tax? that sounds awful
@trynagetlaid i heard a bill of sale really doesnt matter again these days. Tax will be calculated on the 80% of the Standard presumptive value if that value is higher than the amount I paid for it. Would suck to pay about $1600 in taxes on a gift
@bmoore can you please explain further, seems like its not that easy

[Bloodhound]

You sound like a cheap bastard! 1600 bucks for a 25000 dollar car? Sounds like a good deal to me.

[ilovepunpun]

Would you want to pay tax on a pair of sunglasses worth $300 given to you as a gift? Same thing applies, i shouldnt have to pay any taxes on anything given as a gift. If i paid for it then thats a different story. Not being cheap. If i didnt have to register the car in my name then i would be golden.

[Missy Mariposa]

Would you want to pay tax on a pair of sunglasses worth $300 given to you as a gift?

No, but we (and the government) recognise that's stupid. Tax on a $300 gift isn't much. Tax on something over 13k makes a little more sense. That's a pretty outrageous gift size when you sit down and think about it.

As others said, write down he sold it to you for some low amount and pay the taxes on that. It's not the legal/ethical thing to do, but you've made it clear you don't care

I'd pay the taxes on it, while I'm cheap at heart I will say this:

Fuck everyone except the tax man.

If I pay taxes on my all of my cash business earnings (which I do), you bet I'd pay them on a car I received as a gift.

[trynagetlaid]

People used to put down $100 as the sale price to only pay $8 in taxes, even if they paid $10,000. That's why the standard presumptive value system was put into effect. The only way that I see for you to avoid paying fair taxes is to get a dealer involved, or a tax-exempt charitable organization.

I have bought cars really cheap, say for example if the owner is leaving town or gets behind on bills and really needs cash; but since they started calculating taxes I haven't found a way to avoid paying a fair amount to the county.

[Oppa]

At a value of $25K, your friend needs to technically fill out a gift tax form. He can only give $13K a year without the gift tax applying. After that, he must either pay a gift tax on the remaining $12k or apply it to his $1 million dollar lifetime exclusion.

Unless family friend is married, then he and his spouse can make a joint gift of $26,000 with the gift tax applying.

Gift tax won't be paid anyway unless family friend has burned through the lifetime exclusion. The lifetime gift tax exclusion is actually increased to $5 million for 2011 and 2012.

[Lust4xxxLife]

Tell them that you live in Arlington and the tornado dropped it in your yard. Nobody claimed it so there was no sale or gift.

LOL... wouldn't it be fun to try that one on them?

I hope everybody did ok in the storms today.

L4L

[Guest082216-1]

here you go.
http://www.ehow.com/info_7752587_max...t-parents.html

[pyramider]

How about saying you got as part of divorce or other legal action?

[ilovepunpun]

I want to thank everyone who contributed to this thread. I'm receiving the car on friday and i plan on just paying the taxes. Seems like the only thing i can do...