I sold a car that left the country. I was told by the shipper/broker that customs requires me to obtain a Employer ID number (ss-4 form) to be able to move the car over seas. So I did this and was assigned a (EIN employer id number) even though I am not a professional builder and only sell a car every couple of years. Is this something new? Anyways my question is this: 1. what are the income tax implications? I did not profit much on the car (between my purchase price and what it was sold for, and didnt keep any parts and labor records for all that was done to restore the car) but want to pay the gov. whats coming to them Thank you!
If you don't have an accountant who knows your financial situation, you might want to hire one. This is about the only internet advice you should take IMHO.
Not sure why you would need an EIN, but if you make a simple profit and loss statement on the car and figure what your net gain was and declare that amount on your taxes you would probably be ok. An EIN is not required for a side business, but registering it with your local government is ie Joe Blow DBA as Joe's hotrods.
The IRS would be looking for taxes on the capital gains. Basically, the money you made on the car. The "basis" is what you ($) had in the car. Include your costs for shipping, getting to the docks etc. What you sold the car for, minus the basis is what you pay capital gain taxes on. I'm not an accountant, but I've paid enough of them. You can take your stuff to a place like H&R Block (because they're cheap) and tell them your basis and what you sold the car for. They'll do the math. Keep in mind that the basis isn't going to be checked by the IRS and they might have a record (because of it going overseas) of the amount it sold for. Think "break even".
I would have asked these questions before I did it .you may have opened a can of worms with IRS on the label.
I was required to obtain an EIN number when I opened my machine shop business in 1988. One person I was doing work for, their accountant wanted it and my accountant agreed with it. I have filed a business tax return for the last 27 years. I doubt it opens anything close to a can of worms.
Obtaining an EIN without need or cause is bound to cause some grief. A shipper saying so isn't cause.
If you have been issued an Employer Identification Number you should file a business tax return including the overseas transaction. I would definitely get professional guidance.
Sounds like poop to me. All you did was sell a car. Ha e you ever had to do this before? Why this time? I'm with 31Vicky on this. You can get tangled up pretty quick with government people who don't anything but how to hand you form and take your money.
You probably could/should have used your regular social security number. EIN stands for Employer Identification Number. You only need one if your business has employees, or if you form an entity (Corporation, partnership, LLC) and YOU are its employee. The shipper assumes you are a business with employees, so their forms assume you have an EIN. Their assumption doesn't rise to the level of a requirement on your part.
Mike, Basically collect all of the receipts for the car, big parts and small parts, parts from swap meets or trade deals. Make a list and give everything a retail market value. Remember to add every single nut and bolt, can of paint.... unfortunetly you can't add the labor...... But since you now have an EIN you may be able to which means the car may have been sold at a loss. Selling a hobby car does not reguire an EIN, small businesses need those for tax purposes. DONT tell anybody you build and sell a car every few years.
Definitely get all your ducks in a row. I save every receipt I get for anything even remotely related to the business. Interesting angle on taking a loss if you have to declare it on your taxes. I've taken losses a few years when the economy was generally in the toilet.
Everything posted here is interesting but I think it is time to hire a tax expert. This could snowball if you are not careful. Charlie Stephens
I sold a car to Finland, and I've never heard of this. I also live in the same shitty political state you do....
Building and selling a car as a private individual every other year in itself is not a problem. The "got-ya", however, is selling a car for a profit is indeed taxable income, and unfortunately it doesn't matter if you are a private individual or a business. And while it is a reasonable assumption not everyone declares their profit, in this case the IRS knows about you and your sale via your EIN so you probably had better declare. The website "The Nest" probably does the best job of summarizing tax implications regarding sales of a used car and a snapshot is attached below. Looks like you better be finding whatever receipts you can and visiting your local tax expert:
thanks for the replys. I was told by the shipper customs will not allow the car out of the country without a ein#. (not sure might be a new law?, maybe a way to better control or have a paper trail ) and was told a ssn will not work. If I error it will be on the side of caution and will have a professional handle it- just curious if anyone else had a similar experience
Was the car titled in your name? If so maybe it is a newer requirement, the last car I've sold overseas was about Christmas a year ago and none have had this requirement.
The following if some of the information that I have collected regarding the export of a vehicle from the united states. This was detailed from a Canadian point of view, but lists out the requirements that a American would have to meet prior to exporting a vehicle. This information was from 2014. Looks like the government assumes that anyone exporting a vehicle would be a business. Automated Export System (AES) is a mandatory filing requirements by U.S. Census Bureau of the of Electronic Export Information (EEI).The exporter or the authorized agent must file the vehicle's EEI information using AES. From AES, the importer (or authorized agent) will receive an Internal Transaction Number (ITN) number in a confirmation message. This number must be presented to U.S. Customs to bring the vehicle into Canada.-- source: www.riv.ca The rule requires electronic export information (EEI) to be filed for any "self-propelled vehicles" -- any automobile, truck, tractor, bus, motorcycle, motor home, agricultural machinery, construction equipment or any other kind of special-use machinery designed for running on land -- through the U.S. government's automated export system (AES). "Starting April 5, the exporter in the U.S. is required to file automated export system information. They have to report to the U.S. Census to tell them who they are, what they're sending, who it's going to, in a nutshell," said Trevor Franzmann, sales and marketing manager at A.D. Rutherford International, a Winnipeg customs broker who works with customers on both sides of U.S.-Canada. A potential problem is that to complete the AES filing, the U.S. seller is required to have a federal tax identification number called an EIN. Private individuals in the U.S. might not have an EIN number but, under the new rule, the American seller will have to get one to comply with the AES filing. Arn't governments great. Canuck
You said "I sold a car that left the Country". If you accepted payment, the car is his now. Shouldn't/wouldn't the new (overseas owner) now be holding the title and they (not you) be doing the shipping, paperwork, etc? Ie; If a foreign buyer handed you cash at the Pomona swap meet and you signed the title over to him and he drove away, you should be done?....What then would the foreign buyer do if the port demanded an EIN and he couldn't find you? His newly purchased car would be stuck here? What Canuck posted may really change the game for foreign buyers shopping for cars here. U.S. sellers may be very reluctant to go forward with getting an EIN (and all the problems it may present) just to sell the car to someone that wants to export it.
These guys will handle everything for the US seller for a fee that seems reasonable to me. US seller doesn't require any special forms etc. http://simplifiedtradesolutions.com This company will do the AES for $35 u.s. The rest of the import procedure stays the same. A couple extra steps involved but it shouldn't discourage anyone from importing a car. Again from a Canadian perspective, but it sounds like the whole proceedure isn't that big a deal, IF you are aware of the steps required and have the proper approvals, ie part of your business. This is just info that I accumulated for my own interest. The funny part is that I understand that exporting a car from Canada to the US is pretty simple. US customs don't seem to care to much, as long as it meets US safety standards, ie MPH speedo, etc. Canuck PS HRTH, you don't want to try playing games with those guys at the border, no matter which way you are going. They play Hard Ball.
I think you should have checked into this before the car was shipped. I would guess if the buyer would have started this process you would been left out of this mess.
haha- I don't see it as a mess but with this new law in effect I would definitely prefer to sell within the u.s.
Interesting thread and concept, buy, sell, profit, hot rods, did not know this can happen. Been buying high, pouring $$$ in and selling low to keep hobby going. 50+ years playing w/ race cars, hot rods and cars in general, Never made a profit, might have broke even once, maybe, but a lot of Fun and good memories have been accomplished. Priceless ! Serious note, consult a accountant pro for advice on your tax liability, tax laws are ever changing. Good Luck !
There is an interesting thing happening right now that pertains to our hobby. Feds are looking to eliminate the $100 bill and possibly the $50 bill to make it difficult for drug dealers and tax cheats! The $500 was eliminated in 1969. I never fail to be amazed at some new tax law that affects me. That's why I use a CPA.
Another thing i have not seen mentioned here is the DMV! Make sure you non op the car as you will get a renewal every year as they don't recognize the sale if the paper work is not completed by the new owner which is more often than not done by buyer since going out of country. I have sold 4 cars and everyone has come back to haunt me dmv wise. No mater what i give them be it the release of liability, new owners info, write them letters with proof it is not in the country anymore, don't matter to them. Then you have the state board to contend with if it goes delinquent, and that is another mess all in it self.
I ship things out of the country often enough to know that you don't have to be in business to ship a car out of the country. Now for the masses here is a little trick I learned about 10 or so years ago when shipping some parts to a fella in Denmark. It was his birthday he was my cousin and there is no tariff on a birthday present. If you catch my drift.
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