After promising to implement this change during 2022's town hall, it has now become official after more discussion at 2023's town hall:
https://2000challenge.com/rules
Beginning with the 2024 $2000 Challenge, traded parts are counted in the recoup limit. The recoup limit has been raised to $2000.
OK, I bought a set of wheels for $50. Then I traded them for a wider set from a stranger. Previously, I would have put $50 receipt against my $2000 budget and listed the trade so there's a paper trail. What changes does this new rule entail? I don't see any difference aside from capping how much trading/recouping I can do. Is it that simple?
Yes, that's correct. You'll mark $50 out of your recoup limit when the traded wheels leave.
In reply to Tom Suddard :
Does the original $50 expenditure count against the $2K budget? I spent it so I thought it would.
Yes, just like buying a car and selling the wheels off of it.
That is a game changer! I would anticipate some much faster cars showing up next year!
Jonathan, I need a new welder. You're stocked up on them.
DeadSkunk (Warren) said:In reply to Tom Suddard :
Does the original $50 expenditure count against the $2K budget? I spent it so I thought it would.
So, the original $50 purchase would count against the $2k expenditure budget, and then when trading them, that trade value of $50 would count against the recoup max. I suppose this is one of the compromises of the new rule, that it hits the combined expenditure/recoup budgets twice. But in a weird way, that seems kinda appropriate since the original $50 wheel purchase is functionally an unrelated transaction since they won't be part of the end build and wouldn't/shouldn't have been counted towards the budget to begin with. Seems like the new rule puts a bit of a kibosh on that loophole.
In reply to Patrick :
All you need to do is be 50k into a cobra or viper and you too can win a 2k dollar welder.
Follow me for more financial advice...
trades that took place before the 2024 rule change are still budgeted to the 2023-and-older trade rule, yes?
100% not trying to be shady, just want to know how far the new rule backdates, as my 2023 build began in late 2018.
Thanks!!!
No, each year your car needs to meet the current ruleset or run in over budget.
Tom Suddard said:No, each year your car needs to meet the current ruleset or run in over budget.
OK thanks!
AngryCorvair (Forum Supporter) said:trades that took place before the 2024 rule change are still budgeted to the 2023-and-older trade rule, yes?
100% not trying to be shady, just want to know how far the new rule backdates, as my 2023 build began in late 2018.
Thanks!!!
I'm empathetic on the long-running build thing, and this new rule definitely puts a hurt on some of my build plans. But I like to remind myself that it's a game we choose to play, and sometimes the rules function as motivation to learn/hone skills to compensate for assets/resources that aren't able to fit in budget. For example, while previously I could/would have traded myself for a rear diff swap cradle and flange at FMV out of my stash, now I'll just have to improve my welding skills and make a copy from square tube and steel plate. It'll hit the budget for less than trading for the finished version, and I can use the recoup budget saved for a brake swap or something else I can't 100% fabricate.
Okay so how do we count self trade FMV? Do we count the value of the item going on to the car against the recoup or the FMV of the part going on the shelf? Or do we keep adding parts to the trade until both values are equal?
I'm assuming for self trades that don't have a receipt we'd need to establish fmv for both items.
https://2000challenge.com/rules/ states:
Beginning with the 2024 $2000 Challenge, traded parts are counted in the recoup limit. The recoup limit has been raised to $2000.
...
Net cost of the Challenge car and the parts on/in/attached to it must be equal to or less than $2000. Your purchase price of the Challenge car cannot exceed $2000.
...
You may never recoup more than a part or car’s purchase price or fair market value (whichever value you listed on your budget sheet).
...
You may sell or trade parts to yourself for fair market value.
Trades count towards your recoup limit, and must be recorded on your budget sheet.
so, if trades are counted in the recoup limit, and we may never recoup more than a part or car's purchase price or FMV, then we may also never trade more than a part or car's purchase price or FMV.
this kinda berkeleys the whole concept of trading, doesn't it? i mean, it's redundant to have an overall "recoup plus trade" limit for the whole project plus have an additional "recoup plus trade" limit for specific line items within the overall.
also, not sure if this is a loophole or not, but the $2000 purchase price limit is only on the Challenge car, not on parts car or parts lot. so buy a $10k parts car / parts lot and FMV cherry pick less than or equal to $2k of content from it to put on your free challenge car.
Bigben said:Okay so how do we count self trade FMV? Do we count the value of the item going on to the car against the recoup or the FMV of the part going on the shelf? Or do we keep adding parts to the trade until both values are equal?
I'm assuming for self trades that don't have a receipt we'd need to establish fmv for both items.
this is addressed by Gumby and Tom Suddard in another thread (my assumption is that "self-trade" is a subset of "trade"):
https://grassrootsmotorsports.com/forum/2000-challenge/town-hall-rule-proposals/253863/page1/
IIRC the self-trade rule used to state something about similar FMV on both sides of the trade. i don't see that in the 2024 rules.
AngryCorvair (Forum Supporter) said:Bigben said:Okay so how do we count self trade FMV? Do we count the value of the item going on to the car against the recoup or the FMV of the part going on the shelf? Or do we keep adding parts to the trade until both values are equal?
I'm assuming for self trades that don't have a receipt we'd need to establish fmv for both items.
this is addressed by Gumby and Tom Suddard in another thread (my assumption is that "self-trade" is a subset of "trade"):
https://grassrootsmotorsports.com/forum/2000-challenge/town-hall-rule-proposals/253863/page1/
IIRC the self-trade rule used to state something about similar FMV on both sides of the trade. i don't see that in the 2024 rules.
Look again, It's in there.
In reply to Indy - Guy :
i see. this brings up another potential issue: only self-trades are defined as requiring FMV.
AngryCorvair (Forum Supporter) said:In reply to Indy - Guy :
i see. this brings up another potential issue: only self-trades are defined as requiring FMV.
That kind of makes sense though. To trade with someone else, they pretty much have to value whatever you're getting as much or less than what they're getting. But I wouldn't hesitate to trade myself this fine dashboard ashtray with a broken tab for that 5.3 LS that's hanging on the stand over there!
Of course, I would also assume that if you have to count it as part of the recoup limit, that would imply that it has to be at some sort of FMV, no?
In reply to wae :
i agree, just pointing out something that could easily be cheated if someone wanted to cheat.
In reply to AngryCorvair (Forum Supporter) :
It can ALL easily be cheated if someone wants to.
Indy - Guy said:AngryCorvair (Forum Supporter) said:Bigben said:Okay so how do we count self trade FMV? Do we count the value of the item going on to the car against the recoup or the FMV of the part going on the shelf? Or do we keep adding parts to the trade until both values are equal?
I'm assuming for self trades that don't have a receipt we'd need to establish fmv for both items.
this is addressed by Gumby and Tom Suddard in another thread (my assumption is that "self-trade" is a subset of "trade"):
https://grassrootsmotorsports.com/forum/2000-challenge/town-hall-rule-proposals/253863/page1/
IIRC the self-trade rule used to state something about similar FMV on both sides of the trade. i don't see that in the 2024 rules.
Look again, It's in there.
So here's my scenario: I have an intake manifold that came off of the engine I'm using in the challenge car and I need a rear sway bar. FMV for the manifold is somewhere between $135 and $199 (avg. $167). I bought the sway bar 10 years ago for $100. Under the 2023 rules I was going to trade it straight across with net zero to budget. Under the new 2024 rule it seems like all trades should just be handled as a sale for recoup and then the other part added to the budget.
So in my example I would recoup $167 by selling the manifold to myself and then add the sway bar to my budget at $100. I would then have the remaining $67 of recoup to use towards some big fuzzy dice and a furry steering wheel cover.
Is this how others are understanding the application of the rule change?
In reply to Bigben :
A couple things: First, I think it's important to remember that a lot of the motivation around the rule change regarding trades was targeted at limiting how much valuable stuff could be added to a Challenge project through trades, especially if someone got a killer deal that came loaded with valuable extras. I think this was especially a concern in the context of self-trades where I think some thought trading could really be abused. Didn't make sense to me because FMV had to be established on both sides of the equation, but whatever... it is what it is now.
Second, how you chose to deal with selling versus trading in terms of accounting is up to you, as long as it complies with the rules, right? So, sure, in the example you provide, you could sell the manifold to yourself and then add the sway bar, but only up to the recoup limit of the original purchase's cost. For example, if the engine the mainfold came off of was $500, there's no problem selling the manifold to yourself for $167. But if the engine was $150, you can't sell the manifold to yourself for $167, only a max of $150. But also consider: if you've already hit the recoup limit on the engine selling off other bits (maybe you sold a set of extra heads it came with), then you could still trade the manifold for the sway bar. At least that's my interpretaton of the new rule regarding trades.
But I suppose the question is: if trading the $167 manifold for the $100 sway bar, do you get to bank the extra $67 of trade value by inputting the FMV of the traded-out part (the manifold), or lose the $67 of value by inputting the $100 FMV of the trade-in part (the sway bar)? Which helps your budget? I suppose it depends on how much value you have on the expenditure side versus the recoup side.
darkbuddha said:In reply to Bigben :
. . .But if the engine was $150, you can't sell the manifold to yourself for $167, only a max of $150. But also consider: if you've already hit the recoup limit on the engine selling off other bits (maybe you sold a set of extra heads it came with), then you could still trade the manifold for the sway bar. At least that's my interpretaton of the new rule regarding trades.
I think this is the big question in everyone's mind. If you max out the recoup on an item by selling stuff can you still trade?
Bigben said:darkbuddha said:In reply to Bigben :
. . .But if the engine was $150, you can't sell the manifold to yourself for $167, only a max of $150. But also consider: if you've already hit the recoup limit on the engine selling off other bits (maybe you sold a set of extra heads it came with), then you could still trade the manifold for the sway bar. At least that's my interpretaton of the new rule regarding trades.
I think this is the big question in everyone's mind. If you max out the recoup on an item by selling stuff can you still trade?
i'm pretty liberal with interpretation of budget rules, and i'm gonna say the answer is NO you can not trade stuff after you've reached the recoup limit on an item. I mean, that was the whole point of changing the rule so trades count as recoup.
and that's why several Challengers are asking for the recoup limit on individual line items to be removed, as (1) trades now count as recoup, and (2) there's already an overall recoup limit on the project.
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