Current Ads selling Model 3 Reservations...anyone else seen them?

[eladts]

The instructions for Form 8936 states that one of the requirements to get the credit is that you are the owner of the vehicle. INAL, but the use of present tense implies that you cannot sell the vehicle before you file your taxes. It is trivial for the IRS to discover this and it is a low-hanging fruit for an audit.

You get the tax credit when you claim it on your tax return.

The only way you might lose it is if you're audited and the examiner concludes you specifically bought the car for resale.

Besides an audit, there's no mechanism in place to claw back the tax credit if/when you sell the car. There is no built-in "time limit" that triggers if you sell the car with respect to the tax credit.

 

[HankLloydRight]

The instructions for Form 8936 states that one of the requirements to get the credit is that you are the owner of the vehicle. INAL, but the use of present tense implies that you cannot sell the vehicle before you file your taxes. It is trivial for the IRS to discover this and it is a low-hanging fruit for an audit.

Not really. The tense is irrelevant. If I buy a car on Jan 1, 2016, and sell it Dec 31,2016 (or even any time in 2016), I am still fully entitled to take the tax credit when I file the taxes in 2017. There is no rule against this. There are plenty of people that buy, use, and quickly sell Teslas, and take the tax credit when they no longer actually own the car. That phrase just means that you "own" the car, versus rent or lease in order to claim the credit. Just look at all the people who bought AP1 cars, only to sell or trade them months later when AP2 was released? Same when the P100D came out. Lots of immediate upgraders. You're saying none of those people are entitled to the tax credit just because they didn't actually "own" the car when they filed their taxes? These people actually got to take two (or more) full tax credits.

Again, the requirements are:

1. You are the owner of the vehicle. If the vehicle is leased, only the lessor and not the lessee, is entitled to the credit.
2. You placed the vehicle in service during your tax year.
3. The vehicle is manufactured primarily for use on public streets, roads, and highways.
4. The original use of the vehicle began with you.
5. You acquired the vehicle for use or to lease to others, and not for resale.
6. You use the vehicle primarily in the United States

See #2. It says nothing about selling the car.

Which is why I pointed out that before that point, the taxpayer is guilty if deemed so by the auditor unless he can convince the IRS otherwise.

A scalper is unlikely to annoy his car insurance to insure the car, and then and drive around for the weeks/months needed to pass the smell test with an IRS auditor. After all, the entire pitch here to justify the scalper fee is that the customer jumps ahead in line for a new Tesla. I think it is going to be difficult for the scalper to satisfy the customer, the insurance company, and the IRS. Oh, and avoid sales tax twice in those states that collect.

Which is why that one guy trying to keep the tax credit for himself should just do it like everyone else and just register/title the car in the buyer's name. That way, they're only dealing with Chad, and not the I.R.S. It's a stupid idea and try to do otherwise.

 

[SoundDaTrumpet]

Here's what California's program says about length of time of ownership to qualify for their EV program:
Applicant and Vehicle Requirements
...

1. Rebate recipients who do not retain the eligible vehicle for the full 30-month ownership or lease period will be required to reimburse CARB all or part of the original rebate amount..

Thanks for posting this. I wish to sell my EV if I decide to buy a Model 3. Resale value looks good for used EV under 3 years old (before used market is saturated with those coming off lease). It will be interesting when other used EVs flood the market in the next few months as Model 3 deliveries are made. I do wonder how the 30-month ownership/lease will slow the flood.

 

[Nuclear Fusion]

They won't allow this. The car must be registered in the name of the reservation holder...

Incorrect.
It can be registered in a business name, when the reservation was in a personal name.
In writing from Tesla to me.

 

[Gdbrown56]

But that's one car sold, regardless of *who* it's sold to. So the reservation line isn't changed at all.



Yes, they get the advantage, but you're also losing the same advantage - so it's a zero-sum-game.

First let me clarify what I am referring to.....
I am talking about those current Tesla owners who have no intention of buying a Model 3 for themselves. But instead, knowing the advantage (get earlier delivery of a 3) they would have being owners , they put in reservation with intentions of making a profit for that spot in line. So in this case it does effect others who are behind the guy in line since the guy had no intention of buying one so..... if he didn't get any takers for selling his reservation, then he would back out and everyone moves up.
My step-daughter about to graduate college is not an existing owner. If she uses my reservation to get an M3, is that giving her an "unfair advantage"? I don't see how that's any different than someone giving their reservation to someone else to register the car.



Nobody is stepping in front of anyone else. Two people are just swapping the same location. Everyone's position in the line remains unchanged.

I'm not saying they should enable scalpers. It's just that it becomes an extremely difficult thing to police for people (typically younger kids) on the front lines doing the actual deliveries. Are they going to ask me to produce my marriage license to "prove" my step-daughter is my step-daughter? Of course, I'm not going to buy the car and just give it to her - -she's going to buy and register it herself (and claim the tax credit, if available). So then the onus of "proof" is some document I give to the sales associate. Now the 20-something Delivery associate is responsible for confirming the validity of a marriage license from some other state or jurisdiction? Its just NEVER going to get to that point/level of scrutiny. They're in the business to sell cars, not be the "reservation police".

I'm also not saying that Elon changes the rules. But I'm a REALIST, not a THEORIST. I look at what's ACTUALLY going to happen, not what "should" happen under perfect circumstances, or what people "think" should happen. Easily HALF of what Elon spouts out doesn't happen or is delayed or just vaporware ("FSD"???). There's not going to be a PR problem if some people buy M3s for family members or even just "friends". They just won't have the staff to enforce that. Nobody is going to have to "prove" anything. If they get their money and move a car off the lot, that's what's going to count in the end.

As long as the delivery people don't detect real scalping (like in the OP example of "selling" a reservation, and two unrelated and geographically separate people are buying the car), then the rest of the edge scenarios are going to just pass by totally unimpeeded. Tesla is in the business and has a fiduciary responsibility to SELL CARS. Not police a list of reservations just to make sure everyone "follows the rules". The one guy that Elon kicked out of the MX reservation line had published a scathing review of Tesla and really pissed off Elon. Elon and Tesla doesn't have the time or the staff to police 400,000 reservations to make sure that the cars are sold to the EXACT person holding the reservation.

But it doesn't make sense to resolve this now. Time well obviously tell what will actually happen when Tesla starts selling cars to reservation holders. I seriously doubt there will be any real due-dilligence at all to match the reservation holder to the buyer of the car beyond a cursory survey question or form to fill out.

Incorrect.
It can be registered in a business name, when the reservation was in a personal name.
In writing from Tesla to me.

I can see that (reservation holder might be business owner and its company car). I think it was pretty obvious that I was referring to a situation where Joe Black in Miami used his 'owner' advantage to reserve a Model 3 to later be sold to Charlie Stein in Brooklyn. Charlie isn't an owner and is willing to pay Joe Black a premium to get that earlier release date. That I guarantee they won't let happen.

 

[HankLloydRight]

That I guarantee they won't let happen.

I'm not sure how you can guarantee it won't happen.

I've already outlined several different and legitimate reasons/scenarios where they have to allow it, not including the "business" loophole.

Quite the contrary, I think it will happen quite a bit, and as Model 3 gets released to the public, we'll be seeing more and more of these scalpers.

 

[voip-ninja]

I can see that (reservation holder might be business owner and its company car). I think it was pretty obvious that I was referring to a situation where Joe Black in Miami used his 'owner' advantage to reserve a Model 3 to later be sold to Charlie Stein in Brooklyn. Charlie isn't an owner and is willing to pay Joe Black a premium to get that earlier release date. That I guarantee they won't let happen.

And how are they going to stop it?

 

[Nuclear Fusion]

I can see that (reservation holder might be business owner and its company car). I think it was pretty obvious that I was referring to a situation where Joe Black in Miami used his 'owner' advantage to reserve a Model 3 to later be sold to Charlie Stein in Brooklyn. Charlie isn't an owner and is willing to pay Joe Black a premium to get that earlier release date. That I guarantee they won't let happen.

I am pretty sure I read that you can have it registered in a family member's name - how would Tesla know if that person being registered in, is not a family member?

 

[Glamisduner]

I personally could care less if this guy sell's his registration. Because he isn't actually selling the registration he is selling the car. I feel bad for the sucker buying it though. They will pay an extra 6k AND give 7k in cash to this guy without having anything to show for it until after the car is built. If it's worth it to that person then great, I'm not going to give up $6k, and put trust into some stranger just to get one early. Even if you can still get the rebates buyer is going to have to pay the full price of the car plus raised by whatever sales tax is (California here, so they pay sales tax twice!). so it's like the buyer will need to pay 12k so as to cover the person's reservation plus the second sales tax.

 

[eladts]

If you sold the car before you file your taxes, are not the owner of the car anymore. It is true that you were the owner of the car, but that's not what condition #1 states. If is also obvious from condition #5 that the intent of the tax credit is not to reward scalpers. All of this is of course just a theory until people actually try to claim the tax credit for a car they have already sold. Then, and only then, we will have an authoritative answer.

Not really. The tense is irrelevant. If I buy a car on Jan 1, 2016, and sell it Dec 31,2016 (or even any time in 2016), I am still fully entitled to take the tax credit when I file the taxes in 2017. There is no rule against this. There are plenty of people that buy, use, and quickly sell Teslas, and take the tax credit when they no longer actually own the car. That phrase just means that you "own" the car, versus rent or lease in order to claim the credit. Just look at all the people who bought AP1 cars, only to sell or trade them months later when AP2 was released? Same when the P100D came out. Lots of immediate upgraders. You're saying none of those people are entitled to the tax credit just because they didn't actually "own" the car when they filed their taxes? These people actually got to take two (or more) full tax credits.

 

[voip-ninja]

I personally could care less if this guy sell's his registration. Because he isn't actually selling the registration he is selling the car. I feel bad for the sucker buying it though. They will pay an extra 6k AND give 7k in cash to this guy without having anything to show for it until after the car is built. If it's worth it to that person then great, I'm not going to give up $6k, and put trust into some stranger just to get one early. Even if you can still get the rebates buyer is going to have to pay the full price of the car plus raised by whatever sales tax is (California here, so they pay sales tax twice!). so it's like the buyer will need to pay 12k so as to cover the person's reservation plus the second sales tax.

Why feel bad for anyone? Everyone is getting what they want. I abhor scalpers but if someone wants the car so badly they will sacrifice not only the tax rebate but pay a $6,000 premium to get the car a little earlier, more power to them.

While paying an extra $13,000 might seem foolish, to some people it is a trivial amount of money and they want bragging rights so that their kid can be the first driving a model 3 to high school.

 

[HankLloydRight]

If you sold the car before you file your taxes, are not the owner of the car anymore. It is true that you were the owner of the car, but that's not what condition #1 states.

This actually doesn't make any sense. The condition is not dependent on the arbitrary date you file your taxes. It's dependent on your tax year. You have to be the owner of the car in the tax year you take the credit. The purpose of #1 is to distinguish between owning and leasing, so people who lease a car don't try to claim the tax credit, which is a real issue because TMC gets that question asked constantly by new lessees.

Here are two perfectly legal/allowed scenarios based on your logic:

Ralph buys a brand new Tesla on December 30, 2016. Gets it titled and registered on December 31, 2016. Ralph files his 2016 taxes on Jan 1, 2017. Then he decides he doesn't like the car anymore (this has happened) and then sells the car Jan 2, 2017. (Or more likely Tesla announces a bigger battery or AP6.0 on Jan 1st, and he decides to trade in his new car). He's OWNED the car for three days, yet can fully take the tax credit since he owned the car on the day he filed the taxes.

Sam, OTOH, buys a brand new Tesla on Jan 1, 2016. Titles and registers it the same day. Due to his particular tax situation, he files an extension for 2016 and files his taxes in October, 2017. According to your rules, he legally can't take the tax credit or sell the car for 22 months, or until he files his taxes. If he just happens to sell his car a year and a half after he bought it with 40,000 miles, but before he files his taxes, oops.. sorry, he doesn't get the tax credit.

That's just not how federal taxes work. It's all based on the tax year, not the date you happen to file your taxes the following year.

And yes, while #5 is intended to discourage resellers, as I outlined above, there are lots and lots of people who buy and sell their Tesla every time Tesla comes out with a better car. None of these people bought their cars with intent to resell, but they did anyway, and are fully entitled to take the tax credit in the year they bought the car.

 

[SoundDaTrumpet]

I do know the resale value Nissan Leafs factor in the tax credit and state rebates. The misinformed or early Model 3 buyer may be easily taken advantage of. I would suggest Tesla to make it well known to be aware that the original purchaser may or may not have taken the tax credit. Blanket statement from Tesla should be fed tax credit is not transferable from owner to owner. For the original owner it's a personal decision to accept or reject the tax credit. For buyers of a previous owned Model 3 having the title transferred to them, it would be reckless to apply for the tax credit.

 

[trm2]

I do know the resale value Nissan Leafs factor in the tax credit and state rebates. The misinformed or early Model 3 buyer may be easily taken advantage of. I would suggest Tesla to make it well known to be aware that the original purchaser may or may not have taken the tax credit. Blanket statement from Tesla should be fed tax credit is not transferable from owner to owner. For the original owner it's a personal decision to accept or reject the tax credit. For buyers of a previous owned Model 3 having the title transferred to them, it would be reckless to apply for the tax credit.

Only the original owner is eligible for the tax credit.

 

[kengchang]

Only the original owner is eligible for the tax credit.

What he said, only the first owner is eligible to claim the tax credit.

 

[daniel]

There's a question of intent: You can't take the tax credit if you bought the car with the intention of selling it. While that might be hard to prove in some situations, a person who has advertised the sale of a car he has not yet bought, and then sells it immediately after taking delivery, clearly had the intent of selling it and would not be eligible for the tax credit. Nor would the next owner, since only the original owner can take the credit. Thus neither of them gets the tax credit. However, if the buyer wants the car badly enough, or has money to burn, he might not care.

When the 2004 Prius first came out, and there was a long waiting list. Some dealers were demanding, and getting, huge mark-ups for immediate delivery. (Good dealers sold from a waiting list and charged MSRP, but there was no rule requiring all dealers to do so.) So some folks might be willing to give up the tax credit to buy the car early, and Tesla cannot stop a buyer from turning around and selling the car immediately after delivery.

What surprises me is that anyone would be so anxious to pay extra to get a Model 3 early when they could get a Model S right now. The 2004 Prius was a new technology and was unique when it first came out. The Model 3 has nothing the Model S doesn't have better. It's smaller (which I like) and cheaper with lower specs. If you can afford to buy it from a scalper you could get a bigger and better car in the Model S instead.

Doesn't bother me one way or another. A buyer ahead of me selling his Model 3 does not delay my delivery by so much as a minute. If the guy placed his reservation before I did, it's his business what he does with it.

 

[Lloyd]

Wouldn't the original purchaser be the only one eligible for the tax credit?

Not if it is held for resale.

 

[kengchang]

Not if it is held for resale.

How does someone other than Tesla can hold the car without titling?

 

[trm2]

How does someone other than Tesla can hold the car without titling?

A dealership can.. oh wait.

 

[Lloyd]

How does someone other than Tesla can hold the car without titling?

Generally you can't unless you are a dealer.