I'm not really sure why the IRS would be involved in this.

I feel like I missed the boat here…with sons, it was match whatever they had for down payment, for daughters it was an outright purchase, (yeah life is unfair sons), but never thought of any tax implications. Now that I think about it, all the money I laid out for car notes, tuition, short on gas money, all of which I recall would be paid back… never did. Is it too late for me to file this 1099 Forgiveness of Debt?

Ref guns.  I ‘loaned’ one son a SW M&P 40 cal to shoot, just to see if he liked it and wanted to buy one…  haven’t seen it since!  Have another one who borrowed a Glock 30, when he bought a house.  I know I’m never seeing that again, as my wife shamed me during the ammo famine to give him my cache of 45.

Ignore any tax impact.

Co sign the loan for him

I’m confused too

It wouldn't. But to some the government is a deity that should never be lied to and should always be obeyed.

The government is holy. Always consult the government when you want to do something to make sure it's "allowed". After all, our rights come from the government.






Geeze. It's no wonder "our side" loses. This is why there will be no "boogaloo".  The government yields to those that are ungovernable.

Probably because when you have a large financial transaction there is a good chance it will be flagged and tracked.  And certainly transfers of vehicle title are not anonymous.  Moving money around to buy a car is definitely not anonymous, unless we are talking about a beater sub-$10k, and even then it's got a decent chance of coming to state and/or federal attention.

The feds allow tax free gifts up to $18k/year.  Excess of that and the donor owes a gift tax which can be sizeable.  

If OP buys a $25k car and transfers title to the kid, then the $7k in excess of the gift limit becomes a tax problem for OP.

There is no issue gifting more than $18k per year.  There is no tax either.

This often referred to as the "gift tax exclusion" but it is actually a reporting requirement threshold.  Any gifting from an individual to another individual that exceeds $18k in a tax year, must simply be reported on IRS form 709.  This gift is still subject to the lifetime estate tax exclusion, which is currently 13.6 million dollars.  So even gifting more than $18k in a year does not create a taxable event, it is simply decremented from the estate tax exclusion for that individual giver.

QFT, simple and easy way to build credit history.

You sound like a good dad OP.

When I read most of these other Generation vs. Generation threads here, at least half the response sound like "Well times were hard for me too back in 19xx, when the Then Current Thing was happening, so fuck em'!" (the Then Current Thing was 50 years ago, and today's main stats for young people are 4x worse)

If he is doing all that, and still paying for his own truck then that's great. My only hope is that you find the best way to help his credit score and insurability in the process.

Only other thing to add, is to have him check out Nerd Wallet or The Points Guy. They will show him what credit cards to open and how to use card opening bonuses to get hotel points or airline miles. If he is strategic and disciplined about it, he could establish great credit and get some perks, too.

Yes. I walked him through choosing, applying, and obtaining a credit card about a month ago. He has a $200 limit. He has limited it and immediately paid it off twice now. It is pretty much all he uses for purchases and pays it off every 2 weeks.

You're overthinking OP.

Just cosign.   Either way, you're responsible for the loan.

You have a pretty explainable reason for why you are doing this. I can't see how it would be flagged by the IRS unless you were to claim the interest on the loan as a business expense or claim mileage from the car. If you wanted to be completely straightforward you could write a lease to own contract to be the same as the loan. There isn't a law that you have to make a profit on the sale.