Technically, the tax basis for Sean would be the fair market value of the car in 2014 when he inherited it from his father. If he was smart, he would have gotten an appraisal at that time. His gain on the sale would be the difference between his net proceeds (sales price less any selling costs like fees, shipping, etc.) and his tax basis (what the car was worth when he inherited it). It would also qualify for the reduced capital gains tax rate since he had it more than one year. So, he should have actually came out pretty good on it.Was wondering what kind of tax liability, if any, the seller would be hit with. The car was purchased for $3500.
Would there be any income or capital gains issues?
He just sold the car for $3.4 million dollars. I think he is going to be just fine.So, he should have actually came out pretty good on it.
My point was he should owe tax on only a small portion of that $3.4M, and at capital gains rates which are considerably lower than regular income tax rates.He just sold the car for $3.4 million dollars. I think he is going to be just fine.
By the way he has a financial team in place so I am sure he did his due diligence before agreeing to put the car up for auction.