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We (wife and I) gave our 17 yo granddaughter a 2008 Saturn

We (wife and I) gave...
We (wife and I) gave our 17 yo granddaughter a 2008 Saturn a month after we bought it. The vehicle selling price was $14, 487 when we bought it. We did pay additional for an extended warranty which is in effect with the granddaughter. Do we have to pay state taxes in Ohio, Delaware County? Vehicle was titled in my name before we sold it.
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Answered in 2 minutes by:
7/13/2013
Richard
Richard, Tax Attorney
Category: Tax
Satisfied Customers: 55,807
Experience: 29 years of experience as a tax, real estate, and business attorney.
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Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.

Good afternoon. Are you asking about whether or not you would owe any gift tax due to your gift to your granddaughter? Thanks.
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Customer reply replied 4 years ago

Asking more if I have to pay any Ohio sales tax. I guess I would also ask if I have to pay any federal or state gift tax.

Thanks for following up. Was sales tax paid upon the purchase of the car?
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Customer reply replied 4 years ago


Yes, we paid sales tax when we purchased the car before we gifted it to our granddaughter.

Thank you. Ohio does not impose a sales tax on the gift of a car. Furthermore, Ohio does not have a gift tax. On the Federal level, there should be no gift tax consequences. Recipients of gifts are not subject to gift tax. And, there should also be no gift tax due from the donor. Each donor can give $14,000 per year per person under the annual gift exclusion. In addition to that, for any amounts in excess of the $14,000 in a year, each person has a $5,250,000 lifetime exemption....which means a person can give a cumulative amount of up to $5,250,000 in gifts over and above the $14,000 annual gift exclusion amount without incurring gift tax....the donor must file a gift tax return to let the IRS know how much of the lifetime exemption is being used, but there will be no gift tax until cumulative additional gifts have exceeded the $5,250,000.



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Customer reply replied 4 years ago


Clear answer. Thanks. I can clear this then with my tax person. So if I claim $14,487, $487 would go towards that. Looks like I should claim the worth of $14,000 which I think I can do as it was a month old and depreciated and $14,000 is above the book value anyway!

You're welcome....it's my pleasure to help. Given the facts, yes, that's exactly what I would do. I would not file a gift tax return when the issue relates to $487 in value on a car that is being valued already at above book value. Have a great weekend!
Richard
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