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This sounded very strange to me, wondering if anyone knows if this is correct? Went to order new 2016 Renegade Trailhawk today and I have a car to trade in (owe $21,000, dealer willing to give $25,500 in trade). Obviously cannot trade in on a car that isn't built yet, dealer is very helpful, no problem they will just buy the car and put the extra as a deposit \ downpayment on 2016 order. All is good until I start the paperwork and they slide me over a W9 form? I ask why would I do that so salesman checks with manger who says I will get a 1099 for the sale of my car? WTF I bought it two years ago for $32,000 and am selling it for $25,500 how the heck am I profiting anything and why would I have to pay income tax? Something is very wrong here no?? This is not sales tax, we worked that out, this would be taxable 1099 income as if I earned $25,500 somehow.

Not sure what to do at this point, I have not signed anything but he did place the order for my custom Trailhawk? Essentially he left it at promising to keep the same deal in 4-6 months when Jeep comes in but a lot can happen in six months and its six more payments on a car I don't really drive (trading in Camaro for a more practical year round car and my son will inherit my 2000 XJ as his daily driver so I can be without the car while I wait for Jeep to arrive). Wondering if I should ask him to double check or just try another dealer?

Any advice is appreciated, glad to have found the forum.
 

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Uhh.. that is really weird. I'm 100% with you on it setting off warning signals.

The IRS says it is a capital asset, but like you said, you are taking a loss on it and thus owe no income tax.

I poked around various forums and such, and the only thing close I saw was some lots initially issuing 1099-misc forms because of a requirement of the ACA that was repealed rapidly as being massively idiotic (i.e. issuing a 1099 for any transaction over $500).
 
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