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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 7152
Experience:  Extensive Experience with Tax, Financial & Estate Issues
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Should I sell a car to an employee and take $150 out of s

Customer Question

Should I sell a car to an employee and take $150 out of his check each week till the $5k is paid off? What are the liabilities to do this transaction?
Submitted: 2 years ago.
Category: Tax
Expert:  Stephen G. replied 2 years ago.

There's nothing improper about an arrangement such as this. Of course there are risks associated with doing this; if, for example, the employee should leave your employment and not have the continuing financial means to continue to make payments on the vehicle, then collecting the balance could be difficult. Whatever the specifics of the arrangement are, should be reduced to writing. There are no particular liabilities associated with an arrangement such as this.

Customer: replied 2 years ago.
What if he gets in an accident or get tickets and the car is still registered in my name?
Expert:  Stephen G. replied 2 years ago.

Well, first of all, if you SELL the vehicle to him, the car would be registered in HIS name not yours. It makes no sense to keep the ownership in your name, if the objective is to sell the vehicle to him. If you were to do otherwise, you would have to list him as an authorized driver of the vehicle & most likely increase your liability insurance to make sure you are covered in the even of any accident where he may be liable. Given the relatively low value of the vehicle, if your intention is to sell the vehicle to him, you are much better off to actually transfer the title to the ownership to him.

Expert:  Stephen G. replied 2 years ago.
Do you have any additional questions?
If not, please remember to rate my response as that is the only way we receive credit for our work.
Thanks very much.