Is your Cash for Clunkers savings taxable?

I just found this at www.goodfinancialcents.com and thought you might be interested to know:

Tax Consequences of the Cash For Clunkers Program

Worried about the tax consequences? For any new government program, I would also be skeptical on the motives. While I’m sure there are other motives, getting tax revenue directly from the vouchers is not one of them. The vouchers are not treated as taxable income. Think of the voucher value as taking the place of your trade-in value. However, if the trade-in vehicle has a greater market value than the voucher value, then it may not be to your financial benefit to utilize the voucher program unless the after-tax benefits are greater. As usual, consult a tax professional to make sure what you choose is best for your situation.
The Tax-free Feature of the Vouchers
If you do take advantage of the tax-free feature of the vouchers, you will be subject to the following tax consequences:
Personal-Use Vehicle
Generally, there are no tax consequences related to selling or trading in your used vehicle since rarely is one sold for more than its original cost to the owner. Losses from the sale of personal-use property are not tax-deductible. That’s that a little bit different from a the sell of devalued stock.
Business Vehicles
Since the voucher is not treated as income, a business that utilizes the voucher program is treated as if it traded in the old vehicle and received zero for it. Its basis in the new vehicle would be the amount paid net of the voucher and any other rebates.
For a business, trading in a qualifying vehicle with a low or zero depreciated basis definitely beats selling it for an amount equal to or less than the voucher’s value. In fact, it may even pay to forego a higher sales price and instead trade in the old vehicle to receive a tax-free voucher.
Example
A business paying tax at a rate of 40% sells a truck for $5,000, it would have $3,000 left after paying a $2,000 tax. If the business trades in the old truck and qualifies for a tax-free $4,500 voucher under the new program, it would be $1,500 ahead.
State Tax Rules Cash For Clunkers
Although there is no federal tax due on the voucher received, there is a possibility of a state sales tax on the Cash for Clunkers program. It all depends on what state you reside. Be sure to consult with a local tax advisor to see what tax implications you may have.
*Note: Cash for Clunkers is officially over. If you still have a clunker and not sure what to do consider donating your car to charity, instead.