In the United States all gains from Hobbies are taxable. The losses from hobbies are not deductible. There is no longer a $17,500 limit. On another note in California you are charged Sales Tax on the full purchase price reguardless if it is a used car. "Born free taxed to death"
Mark the reason they want cash is because it is harder to trace. By the way did you get the Corvette you are looking for?