When Auto Rebates Concern The IRS

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If you are lured into buying a new car by Detroit's latest incentives, is the rebate considered income? The Internal Revenue Service has ruled that it isn't. Rebates from an automaker for purchasing or leasing needn't be included in the gross income of an auto buyer.

But the IRS hasn't signed off completely on the matter. On a new car, the cost basis (the starting point for depreciation of a business vehicle) must be reduced by the amount of the rebate. Similarly, if the car is leased, the rebate is considered a reduction of the rental fee.

Last updated: Aug 1, 1982




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