Tax News

CCH (cch.taxgroup.com) reports:

  The Franchise Tax Board (FT has clarified the California personal income and corporation franchise and income tax treatment of the federal Car Allowance Rebate System, or "cash for clunkers," voucher benefit provided to purchasers of qualifying new cars and trucks in conjunction with the transfer of an eligible trade-in vehicle to a car dealer. According to the FTB, the transaction will be treated for California income tax purposes as a sale or exchange of the used car that the person delivers, in exchange for consideration of the $3,500 or $4,500 voucher, as the case may be. Persons trading in used cars may offset the applicable amount realized by the basis of the used cars relinquished, which is generally cost, in determining whether they realized gain on the transaction. Personal losses on the sale of personal assets, such as a family car, may not be used to reduce taxable income.

E-mail , California Franchise Tax Board, July 30, 2009, ¶404-951

  Other References:

  Explanations at ¶10-640

  Explanations at ¶16-070