subject: Is the Cash For Clunkers Discount Taxable to You? [print this page] The Cash-for-clunk program was so popular with consumers that it is funded and completed two full two months but ended before the scheduled appointment. The program sent a shot of adrenaline by the automotive industry through the creation of large discounts. Now that the program has closed, many are asking whether the discount is taxed as income.
The tax code has been called a crime against humanity by none other than former President Jimmy Carter. There aremany problems, but it is the twisted logic that is a saving as a gain. The classic example is the game show participants. Let's say they go ahead and win the game. The money, cars, travel and other benefits, all nice and all, but they are also taxable. In fact, many winners at the end sell the most things that attract them to pay the taxes. You get to keep the rest, of course, so it's not all bad.
The Cash-for-clunk program provided a discount of$ 3,500 to $ 4,500 from the price on the vehicle as long as a number of parameters were met. I will assume that you meet these parameters, since one of the estate and move to increase the tax issue. The bad news is, this prize is technically considered to break a win for car buyers in the framework of basic tax law. What does that mean? It means that you are either a capital gain or income tax on the $ 3500 $ 4500 price reduction you received or paid.
BeforeYou get a red head, there are some very good news. Congress actually anticipated this problem once [] and are treated with it. The cash will be for clunk legislation includes a central point of noting that the price discounts are not considered a taxable profit in any way and the IRS may not seek compensation granted.
