[427king]

If the car is owned for 1 year or more it is considered a long term cap gain and is subject to 2o% cap gain tax,also our state adds 5% cut,for a total of 25%. If the car is owned for less than 1 year it is considered a short term cap gain and then the income realized is not a cap gain, but rather considered regular income which can be taxed at 43% here in CT[38% highest bracket plus 5% state]. In a perfect world you should sell a short term gain in a year where you have no other income to take advantage of the lower tax brackets, i havent done the math but it would save you 5 figures in taxes in any given year if you profit by 75K for example.[Not that youd want to quit your job to save that]. Another thing is if you own the car for 10 months for example,wait the extra time for sure and save up to 18% in taxes by holding it for the year.Lastly it is a big advantage to sell a car in the beggining of the year rather than the last few months of the year.If you sell a car in Jan 2007 for example the taxes arent due until April 2009. And you have 16 months to use that tax money to invest in a cd or something. if you sell in Dec 2006,you owe the tax in 5 months instead of 16 months in the previous example just by holding out on selling by a few days or weeks