Vw buyback

[jsbtax]

Client gave back 2012 Jetta Wagon and received $5500 Additional Restitution Payment + blue book value as a result of class action settlement.
I assume all w/b non-taxable up to basis of vehicle?? Thoughts?

[Roland Slugg]

I assume all w/b non-taxable up to basis of vehicle?

Your assumption is probably incorrect. Class action settlement awards are usually taxable. The recipient will receive a form 1099-MISC from the disbursing agnt, and the $5,000 will be (or should be) reported in Box 3.

The amount received for the vehicle is not taxable unless it exceeds the vehicle's basis. That could be the case for a business vehicle that was depreciated.