[Halon]

My co-workers wife is a former CPA. Here's what she said:


If it was a personal car you sold and you sold it for less than you bought it for, then you don’t have to claim it as income. However, if you bought a car for $2,000 and turned around and sold it to a sucker for $4,000, you would claim $2,000 income. If you bought the car for $2,000 put $1,000 worth of work into it, you could only claim $1,000 (if I understand all of this correctly).

As far as new cars. You can only claim the sales tax if you are taking the sales tax deduction in the state of MN. Otherwise, if you are taking the income tax deduction, you can’t claim the sales taxes on new cars (or any other item for that matter).

Here are some links my wife shot me that may explain this better:
http://www.irs.gov/individuals/artic...152421,00.html
http://www.irs.gov/taxtopics/tc409.html