Howdy, I recently sold a used car to the Zoo. They subsequently provide me with a 1099-misc for $13,500 for the amount they paid me for the car. I don't have a business, I am a regular simpleton employee with a w2. The value of the car was about 13,500 and it is not depreciated or anything. I just sold them some personal property. I don't think it is right that I am taxed on this amount. What do I do?

“The value of the car was about 13,500 and it is not depreciated or anything.”---->What do you mean by “ it’s not depreciated or anything”???? Generally speaking, whether you take your car depreciation is totally out of your control. What I mean is that depreciation of your car is the decline in the car's value over the course of its useful life. It is defined as the reduction in value of an asset due to usage, and passage of time. It usually starts from the moment you purchase the car and take it your home.
“I don't think it is right that I am taxed on this amount. What do I do?”----> The 1099-MISC form is used to report direct sales of over $5,000 in consumer product as it is purchased by the Zoo for non-retail sales. When you get a 1099-MISC, remember that the government gets a copy, too, so you can't ignore it. However, if you somehow manage to sell your personal car for a gain (though it is doubtful; as you can see, for the vast majority of cars, the selling price is less than what the owner paid for it. However classic and collector cars have been known to yield gains for their owners. If you happened to be fortunate enough to buy a car which became a classic and increased in value, you would have a reportable capital gain. For these types of gains, the amount of tax owed depends on how long the car was owned. If owned for a year or longer, the long-term capital gain treatment is applied and the taxes are less than if the car was owned for less than a year. Then you need to file SCh D of 1040), yes, it is taxable income. You must include as other income on Form 1040. You're capital gain or loss is figured by subtracting your cost basis in the car from your sales proceeds. If you bought the car for $13,000 and sold it for $14.000 you would have a $1000 capital gain. The cost, proceeds, date bought and date sold would be reported on Form 1040 line 13 and Schedule D. Depending on how long you owned the car will determine if the gain was short-term or long-term.
If you sell personal car for a loss, which is the normal situation, not reported on tax return. It is not deductible UNLESS the car has been used in a business. Losses on the sale of personal property are not deductible.
However, as you can see, after sale, you notify the DMV with the name of your buyer in a form releasing your ownership and liability.

Wow Wnhough, that is a great comprehensive answer.

I guess I was just thrown off because TurboTax kept telling me I needed to file a Schedule C. Now I see I can just add it on line 21.

However, I can add the 13,500 on line 21 "other income" but I am not sure how to show cost basis on Schedule D. Expecially since I will be constantly showing a $3000 capital loss carryover already from schedule D from the decade old dot-com bubble.

I'm thinking I need to set up a schedule C just to record the sale of this vehicle?

Other facts, I have had it just under a year. I paid $16,000.

What I forgot to mention was that this item is in box 7 of form 1099-misc.

Tom

“I'm thinking I need to set up a schedule C just to record the sale of this vehicle?”---->I guess so. You should be reporting this income on Schedule C (or C-EZ) or on line 21 of Form 1040. The NET amount from Schedule C or the NET amount reported on line 21 should be reflected on Schedule SE. According to the IRS instruction, you should report it on Sch C; if the payment that you received from the Zoo is listed in box 7 of Form 1099-MISC, you are being treated as a self-employed worker, also referred to as an independent contractor, and need to file Sch C and SE if the amount on Sch SE line 4 is $400 or exceeds $400 and go on 1040.

Thanks again Wnhough,

I called the IRS on this too. They told me I could set up a schedule C and make sort like a 1-day company to handle this transaction.and then somehow justify the cost basis in the schedule C. I.e. sell it to the business for $13500, then sell it to the zoo for $13500. But they said that might generate more attention than just ignoring the 1099-misc altogether and waiting for the audit to explain myself. They said getting a 1099 was completely wrong for this type of transaction and box 7 is for services such as labor provided, not a used car sale. They told me to first ask the zoo to correct the transaction. I will look into the schedule C a bit more to see if I can somehow legitimize this. Thanks for the advice.

" But they said that might generate more attention than just ignoring the 1099-misc altogether and waiting for the audit to explain myself.They told me to first ask the zoo to correct the transaction. I will look into the schedule C a bit more to see if I can somehow legitimize this."---> I see; I guess you probably also file your Sch D for proof for potential situation , in which you may be asked by the IRS.

" and box 7 is for services such as labor provided, not a used car sale."---> you are absolutely correct. A 1099-MISC form is used to report miscellaneous income to the IRS. This form is used for income earned by an independent contractor for his/her legal services. Good luck~~~