Potentially Shady Idea

"Steve is equipped with Electronic Fool Injection" (itsalwayssteve) 05/23/2018 at 10:34 • Filed to: Danger Ranger, I need A/C!

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My wife started a new job, mostly enjoys it, and it’s a stepping stone for her career path. Where she works (a pet crematory,) has several work trucks that get retired after about 10 years. They have a fleet of Rangers and Frontiers right now - whatever they could pick up cheapest at the time. Anyway, they sell them to employees at a discount when they need to be sold - last one was an 06 Frontier with 300k miles, well maintained, 4cyl auto 2wd. They sold it for $1500.

Like this, but with a locking bed cover

The distrct manager is talking about selling their 2008 Ranger (Sport 4.0/auto/2wd) because it’s up over 200k and has some minor issues. Also, the 20-year-old driver just backed into a brick wall a couple weeks ago and banged up the rear end. Their estimate to fix is somewhere around $1500 - the bumper and tailgate are damaged but there’s no frame damage. If they decide to sell it, my wife and I were going to ask their selling price. If it’s more than about $4,000 I was going to suggest this idea:

Give us the truck. Report its value as income throughout the rest of the year.

My dad did this with a car when I was a kid, and it worked out for his employer - a trucking company.

I’ve been given prizes as bonuses and had to have them as reportable income on my taxes before. If they want to dispose of the asset, and don’t necessarily need the cash, is there a legal way to do this?

Just a thought...

E92M3 > Steve is equipped with Electronic Fool Injection 05/23/2018 at 10:54

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Not sure I follow. Are you saying instead of you paying for the truck, they pretend to pay your wife for a few weeks, but not actually deposit her pay?

Steve is equipped with Electronic Fool Injection > E92M3 05/23/2018 at 11:00

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Essentially yeah. I’m no lawyer or accountant but I was guessing there’s a way to show asset disposal as income on our side...

When my roommate won a $1500 TV in an office drawing, they reported it as $500 income per pay period for 3 pay periods. I had the same thing with a $1000 stereo I won in like 2004.

RamblinRover Luxury-Yacht > Steve is equipped with Electronic Fool Injection 05/23/2018 at 11:03

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There probably is a way to handle it. My instinct would be that it would fall under some permutation of a 1099-MISC, you know, miscellaneous income - which, if enough, can require that you file self employment tax and pay medicare and social security on yourself. Which can be more trouble than it’s worth.

I don’t know that for a fact, though, and there might be a way for them to call it an employee expense or reimbursement. IANAL.

diplodicus > Steve is equipped with Electronic Fool Injection 05/23/2018 at 11:03

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Why would they ask 4k for a ranger with 200k and a fucked bed?

functionoverfashion > Steve is equipped with Electronic Fool Injection 05/23/2018 at 11:04

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We sold vehicles to employees before, at the marina where I used to work... we’d just set up a pay deduction for the employee, like a loan, until the amount was paid off.

Otherwise, it would be like a bonus, you’d have to report it on your taxes, as would the business.

E92M3 > Steve is equipped with Electronic Fool Injection 05/23/2018 at 11:05

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That won’t pass an audit. The best way to do it, is say your wife works 40 this week. They report 24 hours worked, pay her for the 24 hrs. The extra 16 hours is deducted from the price of the truck. Do this for a few weeks/months until she’s donated enough of her time to cover the truck. They then sell her the truck for $1 on paper.

crowmolly > E92M3 05/23/2018 at 11:07

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They then sell her the truck for $1 on paper.

That wouldn’t fly in some states. You’d get a letter from the DMV regarding tax fraud.

Steve is equipped with Electronic Fool Injection > diplodicus 05/23/2018 at 11:08

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Because in Charlotte, the market for pickup trucks is insane.

PartyPooper2012 > Steve is equipped with Electronic Fool Injection 05/23/2018 at 11:10

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post a list of trucks and prices. We see what we like and may want. you buy asking price. sell higher to us... not MUCH higher...

BrianGriffin thinks “reliable” is just a state of mind > Steve is equipped with Electronic Fool Injection 05/23/2018 at 11:11

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If it flys, it’d be non-cash compensation and you’d report it as “other income”, otherwise they’d be on the hook to withhold taxes from the “wages”.

Personally, the cleanest way would be to see if the employer could loan her the difference and then have the loan paid back through future wages. IE: they want $5k for the truck, you pay them $4k cash now, they “loan” out $1k, your wife pays it back over ten $100 deductions from her wages.

E92M3 > crowmolly 05/23/2018 at 11:12

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People do that all the time here. Mostly family deals. The DMV uses a table on what the vehicle is worth to determine the tax, regardless of what someone paid for it.

Dr. Zoidberg - RIP Oppo > Steve is equipped with Electronic Fool Injection 05/23/2018 at 11:13

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Just see if they’ll take 2k cash for it?

crowmolly > E92M3 05/23/2018 at 11:14

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You guys do it better than here in NJ.

Here you report the sale price and pay tax on that, and if it doesn’t jive with the car’s “expected value” you get the tax fraud letter.

Bob Loblaw Made Me Make a Phoney Phone Call to Edward Rooney > Steve is equipped with Electronic Fool Injection 05/23/2018 at 11:16

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Pretty straightforward and above-board, actually. They call the difference between the sales price and the market value a gift to an employee, and you record that amount as taxable income.

I could make an argument that it’s not even a taxable gift, but for professional reasons I’m going to stay away from that and be conservative and say that what you’re describing is totally above board.

Arrivederci > Dr. Zoidberg - RIP Oppo 05/23/2018 at 11:39

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This - seriously. Given the truck has damage, to them it’s probably not worth getting repaired and they can sell it to you. Just come up with a realistic offer and run it past them.

Tripper > crowmolly 05/23/2018 at 11:46

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What if it’s a “gift” on paper. I’ve never had a problem with that in PA.

crowmolly > Tripper 05/23/2018 at 12:46

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Does not matter, you are still liable for tax.

Tripper > crowmolly 05/23/2018 at 13:11

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https://revenue-pa.custhelp.com/app/answers/detail/a_id/2359/~/are-vehicles-received-as-gifts-subject-to-sales-tax%3F

crowmolly > Tripper 05/23/2018 at 13:19

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From the form on that site:

If no proof that sales tax was paid is available, or the sales tax was paid in a non-reciprocal state, sales tax must be paid on the current fair market value of the vehicle.

So I guess in PA you are liable unless you can prove that tax was paid.

Slant6 > Steve is equipped with Electronic Fool Injection 05/31/2018 at 07:37

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If you’re looking for a Ranger I have one for sale in NC.

Steve is equipped with Electronic Fool Injection > Slant6 05/31/2018 at 09:34

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I’ll run it by the wife. What’re you asking?