From TM Forum "Winner From North America For First Referral Program Turned Down P90D"

[HankLloydRight]

Getting back to the tax talk for a moment, why does it even matter what Tesla values his car at? He wouldn't have been selling the car to Tesla. The "prize" was clearly the difference in value between the new car and his car. It seems to me that he could use any reasonable data to place a value on his car. There should be no reason for the IRS to require that he use Tesla's trade-in value. He should be able to use Kelly Blue Book Value, Edmund's, etc. He could, conceivably, have advertised the car, and gotten offers to validate an actual value higher than what Tesla offered. He could take a page from realtors' playbooks, and show the IRS comparable sales.

I could be wrong about all of this, but logically there doesn't seem to be any reason he should have had to use Tesla's valuation for tax purposes, since they weren't actually buying the car.

This is true.. This happened to me with the AMEX wish list contest.. I can explain the details tomorrow.

 

[tomas]

Nobody is factoring in the $7500 federal EV credit the winner would receive for the new car. To be accurate, that needs to be subtracted from the income tax. So, the swapper's MAX exposure is $22,500, though it would probably be less per the fair market value vs trade in issue noted above. Any tax accountant worth their salt would advise using average used price vs. trade in. So, I'd guess the winner's exposure assuming max tax bracket is closer to 15k. This guy should consult a tax advisor before sounding off. Sure, tesla might send a 1099 reflecting 30k, but that doesn't need to be what you file if your position is supportable.

 

[bestfind]

I think I figured it out. Ever since this thread was posted (and running some numbers in Excel) -- I think the error may have been on the part of the winner. Let's break down what he posted above.

-- I was made to understand that a swap meant that I would be trading in my 70D,

So far so good

-- for which I would receive the proceeds, than be given a P90DL,

So he's giving his car back to Tesla, and banking the proceeds

-- I would receive the proceeds, than be given a P90DL,

So he's getting the proceeds from his trade AND the P90DL for free?? I think this is the basis of the error in his calculation. That's not an "upgrade" that's a "free car" (P90DL). [what Andyw2100 described above.]

-- but would be responsible for the sales taxes, doc fees, and any income tax on the value of the prize

He clearly admits and accepts that he'd be responsible for the sales and income tax on the value of the prize

-- Since the value of the trade-in was greater and expected to offset this, it would have been a swap

He's applying the $72k trade-in value he thinks he's getting for his trade towards the tax on the P90DL (unclear if he expected tax on the full value or the net trade value), so it's a wash in his mind, maybe a little left over after paying the taxes, maybe not.

But any way I run it, he *is* trading in his car, but he *is *NOT* getting the proceeds from the 70D, and he *is* paying the differential tax on the P90DL, which he acknowledges he'd have to do.

If I'm trading someone thing A for thing B, I don't expect the trader to pay me cash for A AND hand over B. I'd expect to trade A for B straight up, and then pay tax on the difference between B and A. The only question here is the fair value for A in order to minimize the taxes.

So yes, if he's willing to pay the tax on the value differential, then yes, I think he's going to be out some additional cash (to the IRS) to close the deal and do the upgrade.

So while Tesla could have structured it differently, I think the winner also had some flawed assumptions on how it was going to work. He's not getting a free car, he's upgrading his existing car.

-- Now I'm told that I swap my 70D for the P90DL, but I'm responsible for the $79K) difference between the new car (+ taxes/fees) and the trade-in value of my old car. This comes out to be roughly $30K in federal/state income tax.

Yes, that's exactly how it should work, although Tesla could have done/handled it differently (say, a 'retail' trade-in value for the 70D)

edit: Quick and dirty bottom line is that he gets a new P90DL for about a $15k discount after taxes.

Am I the only one not getting why he doesn't just receive a model s and not swapping? It says the following on the Tesla blog:

The owner that makes the most qualifying referrals in each of North America, Europe and Asia/Pacific will receive a Ludicrous P90D Model S

Referral Program | Tesla Motors

Why would he have to trade his car in for that? It literally says you will receive a P90D.

 

[andrewket]

From TM Forum "Winner From North America For First Referral Program Turned Do...

Am I the only one not getting why he doesn't just receive a model s and not swapping? It says the following on the Tesla blog:


Referral Program | Tesla Motors

Why would he have to trade his car in for that? It literally says you will receive a P90D.

"What’s more, we’ve added an additional reward: the customer who makes the most referrals by the end of October will be invited to swap their current Model S for a fully loaded Ludicrous P90D Model S, for free. All other terms of the program remain unchanged."

 

[Johan]

"What’s more, we’ve added an additional reward: the customer who makes the most referrals by the end of October will be invited to swap their current Model S for a fully loaded Ludicrous P90D Model S, for free. All other terms of the program remain unchanged."

Everything is relative, right?

I'm sure he'll get it in "two weeks"

 

[lolachampcar]

The end result is that Tesla now has a very happy winner.

 

[HankLloydRight]

The end result is that Tesla now has a very happy winner.

What happened?


I see you deleted the OP and I can't find that thread on the TM forums.

 

[HankLloydRight]

Am I the only one not getting why he doesn't just receive a model s and not swapping? It says the following on the Tesla blog:

Referral Program | Tesla Motors

Why would he have to trade his car in for that? It literally says you will receive a P90D.

That's the prize for Round 2 of the Referral program (current). For Round 1, it was what andrewket posted:

"What’s more, we’ve added an additional reward: the customer who makes the most referrals by the end of October will be invited to swap their current Model S for a fully loaded Ludicrous P90D Model S, for free. All other terms of the program remain unchanged."

I also believe they added this additional reward before the change to VA and OH referrals.

 

[Max*]

The end result is that Tesla now has a very happy winner.

Very typical of Tesla.

Step 1. Screw up
Step 2. Public Outcry
Step 3. O ****
Step 4. We'll work with you, if you keep your mouth shut
...
Step 5. Profit

 

[heems]

Looking at it, I also think this is an error on the winner. He was assuming the case of a prize of a free P90DL, when the prize is actually a swap (value of prize is difference between the two). Basically he assumes he can sell the 70D for whatever value it's worth. Then uses the proceeds to pay for taxes and fees on the free P90DL he is getting.

However, the actual prize in a "swap" should be that Tesla is paying the difference between the prices of the used 70D and new P90DL, and he owes income taxes on that prize. There would be no situation where he would be out nothing out of pocket, just that the
taxes owed will be lower if his 70D was valued higher.

This. The winner is double counting. Actually Tesla is doing him a favor accounting this way vs the way the winner is asking. If he won the p90 ( say 150k ), he would pay the income + sales tax on 150 plus he'd have to give up the car (say he sold it himself for 80k). So his total outlay is 80 + 50 (assume 30% tax) = 130. With current method used by Tesla, 70 (valuation from tesla) + (150 - 70) * 0.30 = 94. That means $50k out of pocket by his method and $24k by TMs. Note that either case the winner is out a 70d and gains a 90d. Uncle Sam is he only difference maker and TM is actually helping.

It's a shame Tesla can't defend itself on these forums. As soon as some one yells the masses pile on about the big bad wolf that is Tesla. What's worse I am sure lots here feel good about themselves cause they made tesla "do the right thing". The thing is they always have.

 

[bonnie]

This. The winner is double counting. Actually Tesla is doing him a favor accounting this way vs the way the winner is asking. If he won the p90 ( say 150k ), he would pay the income + sales tax on 150 plus he'd have to give up the car (say he sold it himself for 80k). So his total outlay is 80 + 50 (assume 30% tax) = 130. With current method used by Tesla, 70 (valuation from tesla) + (150 - 70) * 0.30 = 94. That means $50k out of pocket by his method and $24k by TMs. Note that either case the winner is out a 70d and gains a 90d. Uncle Sam is he only difference maker and TM is actually helping.

It's a shame Tesla can't defend itself on these forums. As soon as some one yells the masses pile on about the big bad wolf that is Tesla. What's worse I am sure lots here feel good about themselves cause they made tesla "do the right thing". The thing is they always have.

People tend to see situations through pre-determined filters. I've had positive experiences with Tesla, so I tend to see things through the filter of good intent. Others have been frustrated by other things, so (I assume) see the situation through the filter of 'poor guy screwed over'.

Personally, I'm just happy to have some reward just for evangelizing like I was doing before any of these programs came out. Most of us have been doing this for free for a long time. While I'd rather not have to pay taxes on some of my winnings, I'm coming out ahead. ymmv.

 

[Andyw2100]

It's a shame Tesla can't defend itself on these forums. As soon as some one yells the masses pile on about the big bad wolf that is Tesla.

There is nothing stopping Tesla from participating in these forums. In fact, I expect their participation would be enthusiastically welcomed.

Tesla has made the decision not to participate actively, and it may well be the correct decision for Tesla. I won't attempt to discuss that issue, as I don't know enough about what may have factored into the decision to have any sort of intelligent conversation about it, and I imagine most others here have no more information than I do. I just felt the need to point out that there is absolutely nothing preventing Tesla from participating in these forums if it was their desire to do so.

 

[HankLloydRight]

If they quietly and quickly said 'sure, we'll take care of that for you', you'd have one very happy customer, and nobody would know there was any problem to begin with.

Oh, please. It would get out, rest assured.

Ok, so there we have it. Issue has been quietly resolved and the winner asked not to disclose the terms.

Let's see if it "gets out". I'm resting assured it does not.

 

[ohmman]

It's a shame Tesla can't defend itself on these forums. As soon as some one yells the masses pile on about the big bad wolf that is Tesla. What's worse I am sure lots here feel good about themselves cause they made tesla "do the right thing".

I haven't had the same experience here. I haven't seen "piling on". This thread has people discussing the ramifications and how the winner calculated his prize, etc. It includes the OP (lolachampcar) admitting a misunderstanding and changing his stance. Many of us have shifted as we've discussed it.

My experience with "piling on" usually includes:

-overly strong emotions
-a lack of facts or fact checking
-lots of heel digging

I just don't see that in this case.

 

[stopcrazypp]

Ok, so there we have it. Issue has been quietly resolved and the winner asked not to disclose the terms.

Let's see if it "gets out". I'm resting assured it does not.

Except we already knew there was a "problem" and that Tesla handled it (in some way). We just don't know the details (yet supposedly).

 

[jeffro01]

Maybe I missed it but when you win a prize you MUST pay the the income tax on the value of that prize. I always assumed that whomever won the contest would know that they were going to get a hefty tax bill from the tax man for winning. It's just the way it works in the good 'ol US of A...

What was the big issue??? The OP was removed and I only had a chance to read it once.

Jeff

 

[stopcrazypp]

Maybe I missed it but when you win a prize you MUST pay the the income tax on the value of that prize. I always assumed that whomever won the contest would know that they were going to get a hefty tax bill from the tax man for winning. It's just the way it works in the good 'ol US of A...

What was the big issue??? The OP was removed and I only had a chance to read it once.

Jeff

To be fair, there are sometimes some kind of tax paid cash alternative prize. Perhaps that is what happened here. We'll probably know if the media picks up this story, but given it was only out for a day, perhaps not.

 

[freeewilly]

Thanks to this thread and the original one on teslamotors.com, Tesla resolved the issues with the winner. Without these threads, it might not happened.

 

[fiksegts]

great to hear, what as the resolution?

Thanks to this thread and the original one on teslamotors.com, Tesla resolved the issues with the winner. Without these threads, it might not happened.

 

[ChadFeldheimer]

Maybe I missed it but when you win a prize you MUST pay the the income tax on the value of that prize. I always assumed that whomever won the contest would know that they were going to get a hefty tax bill from the tax man for winning. It's just the way it works in the good 'ol US of A...

What was the big issue??? The OP was removed and I only had a chance to read it once.

The crux was that the trade-in value set by Tesla was relatively low, thus inflating the value of the prize and the income taxes due - to such an extent that accepting the prize was not a no brainer.