I gave my 18-year-old dependent son who is a full-time college student $ 20,000 to buy a car, which he bought in his name.
Now he is selling the car and he will receive the money. Is this considered a capital gain for him? If so, does he have to pay the IRS tax on this?
Which IRS document deals with this subject?
Good news for you and your son, the sale of a personal vehicle does not need to be reported on your tax return, unless you sold it at a profit.
Note: If you sold your personal automobile for more than you paid for it, then you report the sale as Investment Income and pay capital gains tax on the profit.
Happy Tax Day!