Can't fine an answer for this on the IRS website. Just states purchase price before taxes.

Line 11 asks for purchase price of the new vehicle before taxes. I'm assuming this amount would include any accessories or options installed by the dealer as well as subtraction of any trade-in allowance right?

 

Say you agreed to a price of 20,000 after trade in. That would be the nimber.

New vehicle negotiated price 30,000

Trade in (11,000)

Fees and transfer charge 1000

Difference 20,000

Sales Tax 1250

Total due 21,250

The amount they are looking for in this example would be the 20,000

 

Yeah that makes sense, however on my contract the sales tax is figured BEFORE any fees, licenses or my ESP is added. e.g (Cash price - rebates - trade in allowance) = Trade difference. Tax is then figured on the Trade difference and then added with the rest as it should creating a subtotal.

So I would think they would want the "trade difference" as the purchase price, since that reflects the sales tax shown, no?

I'm probably making this more complicated than it really is.

 

That is correct, they want the net price that the tax was calculated on.

 

The easiest way to figure out the "purchase price" that the tax was paid on is just take the tax amount and divide by the tax rate for your state/county (i.e. 6% but use 0.06) and that will equal the "purchase price" of the vehicle for IRS tax purposes.

(disclaimer...I'm no tax professional!)

 

Thanks guys.

 

That is correct

 

I just did my taxes last night and used the paper work that came with my tags. It had the sale price listed and what the tax was on that price, so that is what I used.