I'm entitled to only one stupid question per year...

[Inqling]

...I'm using it now.
I believe if you do a trade-in for a car at a dealer, you are only charged taxes for the difference in the two vehicles. With that in mind, what is the price of the purchased car? I know that sounds a little obscure, or obvious, but I'm talking from a federal tax standpoint... which is never obvious or logical. In regard to the Used Clean Vehicle Credit, does the same thing apply here? If the car (and I) meet all other check boxes, can I get a used $35K Tesla S with a $11K trade-in and qualify for the UCVC?

 

[E90alex]

1) that’s always not true, it depends on state whether you get a sales tax reduction for a trade in.

2) the price of the car purchased is still the same. So no your idea wouldn’t work.

 

[Tronguy]

Um. When you trade in a car, for federal tax purposes, there's no sales tax (that's the State's job), but there is capital gains.

So, a trade in is really two actions: How much you sold the old car for. And how much you bought the new car for. Both show up on the paperwork as separate line items.

If you sell your old car for less than you bought it, that's a capital loss. You don't have to report it.

If you did want to report that.. that's a used item. It ain't like stock. I suspect that depreciation kicks in, but that, I think, only gets used if one is running a business.

When you have just bought your new car, the price you paid is your cost basis for the asset.

 

[EVFamilyGrins]

The price of a used $35K Tesla S is $35K and DOES NOT qualify for the UCVC. The 11k trade in does not change the purchase price of the the car, it affects how much cash/financing you have to come up with to drive the car off the lot. The sales contract with the dealer will list the purchase price of the car (35K) and that is what determines if the car qualifies for the UCVC.
Now it might work if you can convince the dealer to sell you the Tesla S for 25K and value your trade in at 1K

 

[Inqling]

Used my quota.
Can't see how I can get what I want under the $25K, so now I won't fret about leaving $4K on the table.

Thanks for the peace of mind!