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If I gift a vehicle to a friend that I purchased for resale, do I owe sales tax? I live in California.


ANSWER


The BIDaWIZ Team's Answer:

This is an interesting question as there could be use tax ramifications for gifting the vehicle. If you did not pay tax on the purchased vehicle since it was purchased for resale, you owe California use tax. In this instance, making the gift is considered a taxable use of the vehicle.
 
However, if you paid tax on the original purchase of the vehicle, then making the gift is regarded as a nontaxable use of the vehicle.
 
References: California State Use Tax Section 6201??6249

The BIDaWIZ Team

 

 

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