How would anyone know if you bought a used car off an individual and paid only the gift tax instead of declaring the real purchase price?

Answer 1

The price says it all. Say it's a brand new car and you bought it for $100. That tells the tale. It's legal! The car is still worth it's value if you choose to sell it. Gift tax has nothing to do with the fact you may want to sell that vehicle in the future and you can request the fair market price for it.

The Q makes no sense many ways...and anyone trying to outsmart the tax process that thinks they can do so by "how would anyone know"....clearly knows very little!

Gift Tax is a Federal Excise Tax...has nothing to do with buying a car...and it is paid by the one GIVING.

The tax you pay when BUYING a car is called a Sales Tax. Imposed by the State your registering it in. Most now insist the amount you claim you paid, even if showing them a receipt fro a person, is somwhere in line with their blue book indicators, or you prove it was actually worth much less. If from a dealer, who collects the tax, there won't even be the chance of understating value. many States will waive sales tax if the car was a gift from a family memeber, say your uncle - you provide the properly sworn receipts that he is your uncle and giving to you, etc. OF COURCE, THEN HE MAY HAVE TO PAY FEDERAL GIFT TAXES ON DOING SO.