ANSWERS: 2
  • You may gift someone up to $12K this year tax free. I would gift it and make clear in the transactional receipts that it was a gift and have the car appraised. http://www.smartmoney.com/tax/homefamily/index.cfm?story=gifttax
  • That's not how the gift tax works. The person who receives the gift does not pay any taxes on it. The person giving the gift can give any person up to $12K each year, without tax repercussions. Since the value of the vehicle is less than that, I suggest making it a gift. The gift tax only comes into play if you exceed your $12k in one year and exceed a certain amount in your lifetime (I believe it's $1 mill? I can't remember anymore) It's really an odd system. If you have more questions about it, you may want to contact an accountant. For now - just follow Someguy's advice and get the car appraised somehow, and give it to your sister as a gift. You'll have to pay to transfer the title and all that, but it'll be a lot cheaper.

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