VW SETTLEMENT

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Message Board VW SETTLEMENT

This topic contains 2 replies, has 2 voices, and was last updated by Neville Reid 4 days, 4 hours ago.

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  • #160778
    Neville Reid
    Participant

    My client received a settlement from VW as part of the emissions cheating scandal.

    FROM: NEVILLE REID

    VW purchased the client’s car (“buyback”).

    VW valued the vehicle at $25,375. VW paid an additional $10,452.72 for restitution. (Original purchase price of the vehicle = $42,000).

    My Questions:

    1. How do we treat this? Similar to a casualty loss (eg fire damage /  loss with an insurance settlement?
    2. Is there any specific tax guidance from IRS and or FTB regarding the VW settlement? or specific guidance on similar “buybacks”?
  • #160799
    Peter Muffoletto
    Participant

    Neville,

    I am not clear as to whether the VW was a business vehicle or personal.

    If personal there is no casualty losses any longer under the TCJA.

    If business, then all gains or losses are reported as such being that the old rules relating to trade ins no longer exists where one would offset the cost of a new business vehicle with the gain/loss of the prior vehicle.

     

     

     

  • #160812
    Neville Reid
    Participant

    Peter,

    Thanks for the follow up.

    This is a personal vehicle.

    Indeed the federal casualty loss is no longer. But as far a I know the CA casualty loss still applies.

    The other issue what is the taxable income? The amount above VW’s estimate of the value of the vehicle? Any (IRS/ FTB) guidance on the treatment of such “buybacks”?