Safest way to accept payment in a car sale

[dhutton]

It looks like I have sold a car and the buyer wants to pay me cash when he picks it up. I don't want to do that since it will raise a flag with the IRS when I deposit it in the bank as far as I know. I am not making money on the sale, I just want to avoid a hassle. I have done this easily in the past when the buyer and I used the same bank but that is not the case this time.

What is the best non-cash way to accept payment and immediately release the car without taking a risk of getting a fake cashier's check etc? I've already been Keislered once this year.....

Thanks,
Don

[Rick Dorion]

I think a bank has to report a deposit of $10,000 and more(?) I sold a car for cash and made a few deposits over several weeks. Also, had to verify all the bills' watermarks before signing over the car! Anyway, didn't answer your question but congrats on the sale.

[dhutton]

This is more than $10,000. As far as I know cash is the trigger for the banks to report. At least I have never had an issue otherwise when deposits were checks for more than that amount.

I'm not making any money on this sale. I'm just trying to avoid a potential hassle.

Thanks,
Don

[rickpaw]

$10k will trigger a report to the IRS. You can make several deposits but it can be a hassle. If the buyer is local, meet him at his bank where you can watch the cashier's check being handed over from the bank to him. That way the chance of fake checks can be minimized.

Congratulations on the sale and good luck.

[MattO]

If he does pay in cash, make sure to verify every bill. Feel the collars of the shirts of the picture (there is a definite texture there), observe the color shifting ink that notes the denomination, look for random red and blue fibers, of course, the water mark, and if you have a black light, anything from a 5 to a 50 has a special stripe inside the bill that shows up under black light and also has the denomination written inside of that stripe (20's are green, and 50's are blue/purple I believe). I am not 100% sure the 100's have a stripe like the other bills that shows up under black light, but I think they do have the same stripe noting the denomination.

:G-Dub:

[Van B]

I always like a wire transfer. But if he is coming to you with cash, make an appointment at your bank to verify all the bills, plus then he knows you don't have a pile of cash sitting at the house after he leaves with the car. It is him that will have to fill out the government forms.

[WSSix]

Cash is the safest way. Just deposit the money over the course of a few months or weeks if possible. Grab yourself a black light before going and scan every dollar.

The other option is wire transfer. You'll have to give him your bank account and routing number though. I've been told this is still safe because even with that info he can't initiate anything. I've never done it though.

You may be able to get a separate account created just for this one time or for occasional use. Possibly talk to your bank to see if they are willing to help or have an option.

[rjsjea]

Meet him at the bank for the $$ transfer

[66fury]

why even put it in the bank? put it aside in a home safe or cookie jar.use it as your day to day money and bank your paycheck or do a monthly deposit spread out over the course of the year.its sad to think that you have to think as if you committed a crime to keep your money in your hands.the irs and the crazy seizure laws are stealing hard working peoples money.

[DRJDVM's '69]

My vote is to do it at the bank....or direct bank wire transfer.

[Che70velle]

Cash is all that I accept with large money purchases, and as said above, do not deposit in your account. Ever. I have a home safe, and that's where I deposit it. I'll use the cash sales from toys to finance other toys. I only use cash to play. I use paypal to purchase small items, and then deposit enough of my stash to cover payment.

[dhutton]

Cash is all that I accept with large money purchases, and as said above, do not deposit in your account. Ever. I have a home safe, and that's where I deposit it. I'll use the cash sales from toys to finance other toys. I only use cash to play. I use paypal to purchase small items, and then deposit enough of my stash to cover payment.

The goal is to get the money into my Schwab account and put it to work thanks to Greg and the Investing 102 thread... :)

Don

[CamaroMike]

I think a bank has to report a deposit of $10,000 and more(?) I sold a car for cash and made a few deposits over several weeks. Also, had to verify all the bills' watermarks before signing over the car! Anyway, didn't answer your question but congrats on the sale.


It is illegal to do this, they call it staggering? because of money launders do this apparently. In your case its just selling a car so not illegal obviously. As long as there was no gain on the sale then you dont have to pay tax on it (last time I checked)

There really is no "safe" way of doing it. Even a wire transfer can go bad.

The best way I can think of is go to his bank with him and watch them print out a certified check (cashiers check) and deposit it in yours before he can spend the money in his account.

I could go on all day on ways people can screw you over. Hate to say it but cash is the best way and as said before mark the bills and make sure there is texture on Ben's coat! If he has all new 100's then you are good to go! Best of luck -Mike

[V8TV]

I'd also recommend getting a marker to check the bills - my bank gives them to me, but I think you can get them at Walmart also.

[GregWeld]

Don't worry about making a deposit of cash into your account - regardless of whether or not it's in a bank or to an account like Schwab. The IRS is not looking at transactions like that UNLESS you're a drug dealer or cartel.


I make very large transactions on a regular basis and have never ever been asked about any of them. Profit or no profit.

You should be able - however - to show receipts etc for the car and it's parts - and that you sold it if asked down the road (as in 5 years from now).

DO NOT TAKE A CASHIERS CHECK EVEN IF YOU TAKE IT TO THE BANK WITH THE BUYER!! I personally know a guy that did that -- and TWO WEEKS later the bank said the Cashiers Checks was fake and took the funds out of his account! TELLERS are not the fraud department!

[CamaroMike]

You should be able - however - to show receipts etc for the car and it's parts - and that you sold it if asked down the road (as in 5 years from now).




Would bill of sales be adequate?




I was a teller not long ago and we just enter the stuff in the computer and send it off to be processed, it take a few days to clear funds from checks. If you think about it a check is a piece of paper with writing on it.

[GregWeld]

Would bill of sales be adequate?




Bill of sale is proof that you bought or sold... but you still need supporting documents to show "LOSS" or "ADJUSTED COST BASIS" if you need to prove you did not profit from the sale.


So you buy a car for 10K - and get a bill of sale for that transaction.... now you just need receipts to show that you spent an additional 40K on paint and motor and wheels and interior... so your ADJUSTED COST BASIS is now 50K and you sold the car for 45K.

Don't try to write it off as a LOSS --- it's not a commercial transaction if it's just your personal car etc.


All of this is only going to come into play in an audit. An audit would be triggered by making a mistake on your return -- or that you're claiming some large loss etc that isn't ordinary... or maybe they just draw your number. Then they'd only be going over your bank accounts if you're kind of sleazy and they don't like what they're seeing - or your stuff just doesn't "add up".


Typically when I've been audited - they are asking for documentation to back up a single issue... I've never been audited where they asked me to bring in all my paperwork etc. My tax filing last year was 184 PAGES long.... so there's just a few transactions to report etc. So to be asked about ONE specific transaction is quite remarkable. However, I'm as honest as the day is long and have every piece of paper EVER since my very first paycheck and the receipts and bills for my very first electric bill payment. So I'm never afraid of being audited.

[barrrf]

why even put it in the bank? put it aside in a home safe or cookie jar.use it as your day to day money and bank your paycheck or do a monthly deposit spread out over the course of the year.its sad to think that you have to think as if you committed a crime to keep your money in your hands.the irs and the crazy seizure laws are stealing hard working peoples money.

Then the house burns down and BOOM money gone.

[BMR Sales]

Take Cash & Check the Bills

[dhutton]

Thanks for all the advice. Sounds like we will use cash and deposit it directly into my bank account together. Buyer is flying in and planning to drive back home. He lives in Colorado, I hope they don't get more snow next week.

Car is my 66 Corvette factory air coupe. I thought I would drive this car but I have discovered that I prefer upgraded suspensions and LS power etc. :) Car was too nice to restomod so I am letting it go.

Thanks,
Don

[Fluid Power]

Greg is right. The form is just used for money laundering prevention. The IRS is notified, but that does not mean you will pay taxes on the deposit amount. Just make sure the bills are good. By a pin that marks them or have the bank do it with the person there.

Darren