gift or selling price / transfer of title

Is it true that when a private party sells a used car that they will claim it as a gift (in California) so that both parties can avoid paying a tax? Its been suggested to me that "everyone" does it this way
and that my buyer will expect to do it like this when I sell my car. I would rather pay the tax and not worry about being penalized for breaking a tax law. Am I being wierd or is there a good reason to claim my car as a gift?
Brian
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Brian wrote:

Might be true that folks do it. However it is breaking the law if ANY money or goods change hands in relation to the auto. It IS considered tax evasion.
If your "buyer" expects this I would wait for a different buyer. Consider that the buyer ISN'T the one who signs the title for transfer OR states in writing that the vehicle was a gift. That is what YOU do.
In most states the DMV will look at the year of the car and base the taxable amount on it if the vehicle is worth more than the stated purchase amount.
I would make out the paperwork and put a reasonable amount on it. Maybe not the full amount but not a gift.
http://www.dmv.ca.gov/ Oh and if the vehicle is NOT currently a California there are even more rules.
--
Steve W.
Near Cooperstown, New York
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Call an accountant or you local taxing agency WBMA.
mike

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Yes, it's been done, but as has been stated in this thread, many states have caught on and will tax you based on their book value if the selling price is too far below it. There are exceptions, though. In some states, a transfer is tax exempt if it is made between immediate family members. But that doesn't sound like it applies in your case.
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