Submitted by andoocampu t3_y7i1lg in Washington
Hi all, if I bought a car needing TLC, cleaned and fixed it, used it and then sold for profit, do I have to pay short term capital gain? If yes, should I pay it right now or when I'll submit my year taxes?
The sale was in the first quarter. Does it make sense to pay it at the end of the year, or should I do it now via the IRS portal?
Since I fixed the car in my garage, I am not even sure how to calculate the expenses.
if it's not a "trade or business" it's not going to be taxable income. If it is a business it would not be a capital gain - the resale price would be ordinary income, against which you would take your expenses including the original cost of the car.
Don't worry about it. Really, it will never be anywhere near on the radar of any taxing authority.
When it comes to tax questions, always consult a tax professional. (Which the folks at H&R Block, Liberty Taxes, and other tax mills aren't.) Never rely on randos on the 'net.
in that case, you are good!
I think you want pay early then. Unfortunately I'm not sure.
WA does not have capital gain income tax so your question is federal related.
Remarkable_Ad7161 t1_isumuw4 wrote
I'm not a tax professional, but I do do a lot of taxes of various forms by myself. So in emcee, this is based on being self taught, and might not be 100% accurate. Given that, I believe you do, but do include cost that you spent as a part of capital expenses. As for when - that depends on what the percentage is. Typically you want to pay 90% of the taxes owed up to the point by the end of each quarter to avoid fees, however this is the final quarter, so as long as you can mention the sale being in the final quarter, you can pay it as a part of your final tax submission.