Darryl
ModelXTracker.com Co-Adm
If you have ever had to go to court over an IRS dispute the burden of proof is on the tax payer not IRS.
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Very important part which negates the flipping potential. I'd figure most people who'd want the 3 desperately enough to pay an all-in premium of 20% on top of retail would've already reserved as early as possible. And most people with early reservations because they waited in line or already own Teslas probably wouldn't let it go for a small premium. There might be a small handful of wacko East coasters who can't wait the extra 6-9 months, but I doubt it would be common.
If it comes down to intent, then lots of luck to the IRS!
If the IRS can demonstrate that no one ever changed their mind about a car purchase after they bought it, whether it was after a month, a week or a day, and they can prove that they know what a person was thinking when they purchased the car, they MAY have a case.
There are 9 Model X on eBay right now with very low miles and in one case selling at MSRP with 88 miles. So it isn't as if people don't change their minds about a purchase.
Besides, I haven't looked at the forms recently, how would they even know that you sold it or when you sold it?
Of course the new owner doesn't get the tax rebate - but they get a car that they would otherwise have to wait for several months if not longer for.
Not all States have sales tax.
The point is, there is
stopcrazypp
Well-Known Member
Just from seeing cases about reporting mileage, actually it would be best of luck to the owner. The burden of proof is typically on the owner, not the IRS, esp. when we are talking about deductions. The IRS doesn't have to demonstrate that there are no false positives, only that it is extremely plausible that you bought the car to resell (and selling off the next day for a sizable profit would be a very good sign).
For the mileage example, there are cases where it is extremely clear that the owner did use a personal vehicle for business (basically it would be impossible for them to have done the business without using their own vehicle at least occasionally), but because they didn't have the records to prove it, the entire deduction was voided. The court still sided with the IRS.
They would know when you report a capital gain from the sale (which you would have a gain if you are a flipper). If you are just selling off, you most likely would not have a gain (or would have a loss). Then if they ever do an audit, they would catch it something like this.
Disclaimer: I am not a tax professional, I just happened to have looked at some of these things recently because of tax season.
manitou820
Member
If the production ramp up is slow, I'm sure there is a chance that the first few thousand owners, most likely in California, could find buyers who would pay a lot over MSRP to have the new flashly Tesla. But by the time most of us start receiving cars, production rates will probably have increased dramatically, and the desire for people to pay a lot over MSRP will drop substantially. I'm planning on a $55k price for my Mode l3, and I have to pay 9% sales tax where I live. It's not worth my time or effort to flip unless I was at least getting $15-$20k over MSRP. And even then I would still probably keep the car.
Considering that they continue to not meet their delivery targets, I'm really not sure. I know they are investing in more production capacity but with close to 300k orders in only 4 days, it doesn't look like supply will meet demand. I guess we'll have to wait and see. It doesn't look like analysts are too hopeful Tesla Motors (TSLA) Analyst Ratings | TipRanks
Thomas Edison
Active Member
I would think that if someone was able to get their car with the full rebate. Then the rebates went away and the wait time for a car was 2-3 years. Then they could totally sell it for a close to 10k profit (not including the rebate). But really only if they didn't need the car anymore. I mean if you really like your car then knowing what it's worth and how long you don't have to wait makes you happier to have it. Selling the would be more out of necessity for most who would do it. But I wouldn't really call that a flip. That's just my 2¢
Bankroetlama
Member
I think everyone that gets a $7500 discount is very lucky. Wish the government did the same in my country.
stopcrazypp
Well-Known Member
You aren't flipping if you didn't make a profit on it.
Thomas Edison
Active Member
I would try to get it titled in his name when it is delivered, otherwise that seems like a $0 sale to me.
wallet.dat
Member
It isn't a judgement call (abominable). But according to these definitions, neither you or your brother would be allowed the tax credit.
You bought the car WITH the intention of reselling it. Reselling does NOT require a profit to occur.
Thomas Edison
Active Member
Is it reselling it if his brother is the first to register it? Or did he simply reserve it for his brother and his brother is the purchaser by registering it in his name first.
stopcrazypp
Well-Known Member
Most definitions of it mention profit:
"DEFINITION of 'Flipping'
A type of real estate investment strategy in which an investor purchases properties with the goal of reselling them for a profit."
Flipping Definition | Investopedia
"Flipping is a term used primarily in the United States to describe purchasing a revenue-generating asset and quickly reselling (or "flipping") it for profit."
Flipping - Wikipedia, the free encyclopedia
While presumably a "flipper" may sometimes acquire a property and overestimate its value and end up not making a profit, the situation described by sports4eva115 clearly does not fall under this.
Bad news: Besides not getting the tax rebate, In California, when you transfer the title, you brother will have to pay sales tax on the purchase. So you will be paying taxes twice.
Good news: California needs all the tax money it can get!
