Game show winnings?

[ripvanwinkle]

How is this car handled? Price is Right game show. Lets say I win a car. I ship it and license it in Oregon. Do I pay CA tax first?  

[ArchietheDragon]

Congrats on the car!

[Deleted]

Actually I think winnings are taxed even higher...?

[Apple]

Sept 2, 2014 20:48:02 GMT -5 ripvanwinkle said:

How is this car handled? Price is Right game show. Lets say I win a car. I ship it and license it in Oregon. Do I pay CA tax first?  

You have my current address, right?

[ZaireinHD]

Game shows usually you can take the cash value
however if you do take the prize
yes you have to pay the taxes first before you take home
then you have to claim the value of the car on income taxes.
when the Price is Right had the Audi R8!
I was actually frightened if someone actually had won that car! that's at least a $100k car!!

a friend of mine won a convertible camaro back when we were in college from a mall sweepstakes.
she (well her mom) had to come up with the tax first, then she got the car, then she had to claim it on her taxes
she kept that car for 5 or 6 years!

[ripvanwinkle]

Reason for asking was today a young guy won a $87,000 BMW on the show. Wonder how much that tax was?

[ՏՇԾԵԵʅՏɧ_LԹՏՏʅҼ]

The winner of a vehicle pays the sales tax on the car - usually the TPIR program arranges for a car that's the same year, make & model - including options that were included on the vehicle, to be picked up at a dealership in or near your home town/state.

ANY prize you win on TPIR is taxed before you even see it - even cash prizes, trips, misc furniture, electronics, etc - cash prizes they probably deduct the tax before giving you the after-tax prize.

The same applies to shows such as Jeopardy or Wheel of Fortune.

[TheOtherMe]

When I won a Chromebook in a Twitter contest, I received a Form 1099.  That means the value of the computer was reported to the IRS.  That ensures you will report it or will receive a letter from the IRS. 

[mwcpa]

Prizes, just like any other income, is taxable under the tax law unless it is specifically excluded.  Income from prizes is ordinary income and taxed like salaries, interest, etc.  it is not taxed higher or lower, but withholding taxes on the lump sum can seem higher than what is taken from a paycheck.  For federal income tax purposes the withholding is generally 25% and states vary (by example, California withholds at 7%).

your actual tax is based upon your total income and allowable deductions and the tax rates at the time and jurisdictions you are taxed by.

[ZaireinHD]

also to add
the winning contestant has to pay for insurance!
insurance on a luxury, or exotic car is expensive for a $80k BMW
then not to mention maintenance!
there is no $19.95 10 minute oil change for a luxury / exotic car!

 

[Artemis Windsong]

I had a friend in the 80s who won a BMW in one of those key contests.  She asked to drive it then turned around and wanted the cash money.  The dealer said no.  She had to take the car.  She ended up selling it to her brother to take care of the taxes, etc.

My neighbor won an older car in a radio contest.  She was so excited.  Never heard anything about the consequences.

[ZaireinHD]

I have The Price Is Right on auto record and just finished watching
this week is / was dream car week
and I thought of this thread

[truthbound]

Sept 2, 2014 20:51:34 GMT -5 @missmargarita said:

Don't they consider the price of the car as income and tax you accordingly?

Yes. You pay the tax on the value of the car or any other winnings you got. That is why the whole Oprah give everyone a car thang backfired years ago. Most of them took the bus home.

[TheOtherMe]

Sept 7, 2014 4:36:29 GMT -5 truthbound said:

Sept 2, 2014 20:51:34 GMT -5 @missmargarita said:

Don't they consider the price of the car as income and tax you accordingly?

Yes. You pay the tax on the value of the car or any other winnings you got. That is why the whole Oprah give everyone a car thang backfired years ago. Most of them took the bus home.

The people in the audience that day were not very happy as I recall.

[rangerj]

A non-cash prize, or other winnings, is taxed at its fair market value (FMV) on the date of the title transfer and that is not necessarily the MSRP (Manufacturers Suggested Retail Price). It is not uncommon for the provider of the prize to use MSRP on the 1099 but, this can be refuted and reduced if the FMV is lower. Who pays MSRP for a car? I had a client who won a car from a church raffle and they issued a 1099 for MSRP. We gathered three comparable car sales that were at least 10% lower than MSRP and Included the information with the tax return reporting the lower value for tax purposes, and never heard anything from IRS. We also reduced the 1099 amount by the $2500 cash rebate being offered on the particular model for that time. As for other award items you can usually find them on the internet for sale at much less than MSRP and that would be my approach to determining the FMV for the tax return. The state sales tax folks are generally more difficult to deal with. They want the sales tax on MSRP. Another CPA I know had a client win a car and did not want that particular make and model so he had the client trade the car in IMMEDIATELY and then reported the trade in value as FMV and reported that amount for tax purposes. IRS accepted that amount. Keep in mind MSRP is merely a suggestion. 

[TheOtherMe]

The 1099 I received for the computer was for a higher amount than it was being sold for at the time I won it.  I had kept the ad from the paper as it was back to school time.  I did reduce the amount down to that amount since it was from the company that I won it from.  I still paid taxes on it.

[thyme4change]

Sept 6, 2014 20:31:52 GMT -5 ZaireinHD said:

also to add
the winning contestant has to pay for insurance!
insurance on a luxury, or exotic car is expensive for a $80k BMW
then not to mention maintenance!
there is no $19.95 10 minute oil change for a luxury / exotic car!

 

Probably still cheaper than a car payment plus insurance for a new Nissan Versa.  

I don't know how much the tax would be, but anyone with a job could probably get a loan on the car for the amount of the taxes.  $80k car - 15%, borrow $12k, pay it off over 5 years.  

Or, take cash value, or sell the car.  Walk away with $50k++.

[NoNamePerson]

I've had tax withheld from gambling winnings a few times. Also received a W2-G.