Asset Values of an Inherited Car; What’s the Proper Value?
Valuing an inherited car
A few years ago, we were working on an Offer in Compromise and John was surprised by how low we set the value of a 1964 Ford truck he had inherited from his father. He loved that truck when he was a kid and remembers sitting in the seat pretending to drive. He also remembers taking rides in that truck with his father. That is why after Dad died, Mom wanted John to have it. John told us the truck was worth about $3,000 – $4,000. He was surprised when we set the value at $1,000. We told him the IRS looks at vehicles valued under $3,950 differently.
What the IRS wants
If you read the Internal Revenue Code, Part 5, Collecting Process, Chapter 10. Seizure and Sale, Section 1. Pre-Seizure Considerations, Revenue Officers are instructed not to seize an asset unless it will produce a net of $1,000 after, confiscation, storage, and sale. The IRS typically doesn’t consider cars with a value under $3,950 as vehicle worth seizing. Therefore, we have more latitude for discounting under a value of $3,950.
Tough argument to make
While the above is true, it is a tough argument for a taxpayer to make. The Offer Examiner will tell the taxpayer they need all assets listed at full value. The standard is Reasonable Collection Potential, what the IRS would get if they seized the asset and sold it at a quick sale action.
Should you get help?
I have seen many people try to prepare their own OIC and fail because they do not fully understand the art of dealing with the IRS. Yes, you can submit an Offer in Compromise yourself but if you are trying to considerably reduce your debt, I recommend you rethink your position.
An “accepted” OIC is not the same as a “successful” OIC.
There is more to it. Sure, the average taxpayer can fill out the forms and after spending hours reading and rereading the instructions provide the substantiation needed for an application to be accepted. How do you measure success? To me, success is measured with an approval on the LOWEST DOLLAR AMOUNT the IRS will accept
If you feel that you may be in over your head, or just want to get a second opinion, let’s set up a short call. To avoid the back and forth emails and phone tag, I have included a link to my Calendar https://calendly.com/taxman/tax-problem-resolution-initial-consultation. Let’s set up a 30 min. phone conference to get to know each other. The phone number to call is 855-829-5877 and my extension is 203.