Is it better to sell the car for $1 or give it to the person?

My limited understanding is that gifts can be taxed. And selling it for $1 was a way to circumvent this.

Though this link seems way more informative.

My understanding is similar to @raum,‘s and I have some experience that seems to confirm this. I can’t remember the exact numbers (since it was around 20 years ago), but when my father gave me his old car, the DMV clerk told me it would cost something like $250 if I said it was a gift but something like $20 if I said I had purchased it for $500.

The reason in New York—the state where I was living at the time, which doesn’t have a gift tax—is that the DMV considers cars given as gifts to have been transferred with their full estimated market value intact, whereas cars sold for a specific amount can only be considered to have been transferred for their actual sale price. But in states that do have a gift tax, those taxes are often two or three times the state’s sales tax (and are again levied on the full estimated market value).

Some states won’t let you sell it for $1.00 or gift it, you must sell it for at least lower wholesale price according to a car value book.

However if it is to an immediate family member this state has a set of rules.

I sold my old car to my daughter for a dollar but she was still living with us at the time. But I think it also depends on the value of the car. If the value is less than lets say, 9,000 then you may not need to sell it and may be able to gift it without them having to pay a gift tax. But essentially selling it proves ownership or the new owners and wipes it clean off your DMV record and they list your car as being sold. All in all though, if your state still collects road tax and they determine the value of your car to be higher than you paid, you will still have to pay the road tax. They don’t determine the value of your car on what you paid. But Gift taxes are higher. So down the road they would have to claim it if it was a straight gift and pay taxes on what the blue book value says it is.

In some states, or maybe all, the cost of registration is calculated by the amount paid. By gifting, they use the blue book value, but by selling for a dollar sets an actual amount.

I live in NY and @SavoirFaire has it right on. Giving it as a gift allows NYS to use book value to price the car. It is not considered zero. They collect a percentage of the sale priced at book value. (I think if might be 8% now.) If the car is worth less than book you have to prove why.
On the other hand if you sell the car for $1 only 8 cents would be owed. You can even say you sold it for $100 in “as is” condition so you only pay $8 and don’t attract any unwanted attention.