What are the tax implications of winning a car in CM raffle?
10-05-2009, 09:02 AM
#41
10-05-2009, 09:15 AM
#42
Le Mans Master
10-05-2009, 09:54 AM
#43
Burning Brakes
One can always donate the winning car to a 501(c)(3) charity and offset the income as a deduction in the year of the winning assuming the fair market value of the car does not exceed 50% of your income.
10-06-2009, 10:38 AM
#44
Instructor
Member Since: Mar 2008
Location: Saint Joseph Michigan
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Ok, you win it, give it to me and I will pay the taxes!! Pluss give you the price of your ticket back...even though its probably tax deductable!!
I like the sun comment , smiles
I like the sun comment , smiles
10-06-2009, 10:46 AM
#45
Race Director
We are all in different tax situations. I am retired, and have structured my situation so that I pay no income tax, although I have nine cars, two houses, and a large motor coach. I already have all the cars I want/need, so I have no interest in "winning" a car upon which I would have to pay income tax. And, yes, I do have an 09 Corvette which makes me happy.
10-06-2009, 11:07 AM
#46
Instructor
Member Since: Aug 2006
Location: Tucson AZ
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10-06-2009, 11:12 AM
#48
Le Mans Master
I can't believe this question was asked. In one of my accounting classes, we discussed about the TV home repair shows, that when they turn a clunker of a house in to a masterpiece, the tax rate skyrockets, and results in the homelessness of the occupants on multiple occasions...
10-06-2009, 12:22 PM
#49
Team Owner
The NCM will collect a 25% fee upon delivery.
http://www.corvettemuseum.com/raffle/rules.htm
The 25% tax is calculated on the "cost" of the car that the museum is charged. It is not MSRP. They are charged a cost from GM that is specific to the car, the model and the options that is included in the particular drawing that the museum happens to be doing at that time. The winner will be informed of what the tax basis is and what the fee is that they will need to provide.
The IRS guideline that specifies that the organization conducting the raffle for a prize greater than $5,000 is OBLIGATED to collect the taxes. The NCM had to apply for a Charitible Gaming License in order to conduct these raffles. Based on the below IRS guideline that they have NO choice but to collect the money UP FRONT:
Federal Income Tax Withholding: Charity Game Ticket Prizes
IDENTIFICATION: The winner of a single charity game ticket prize of $600 or more must provide the organization with proper identification. Two types of identification (e.g. driver license, social security card, voter registration card, etc.) should be furnished by the winner to verify his or her name, address, and social security number (SSN).
W-2G: If an organization awards a single charity game ticket prize of $600 or more, they must file Form W-2G.
WITHHOLDING: It is important that organizations understand the difference between "regular gambling withholding" and "backup withholding" of federal income tax.
The "regular gambling withholding" rate is 25% of a prize.
If an organization awards a single charity game ticket prize with a value between $600 and $5,000 and the prize winner provides proper identification, no withholding is required.
If the prize amount is more than $5,000, the organization must obtain proper identification from the winner (as described above) and withhold 25% of the prize. If the organization is unable to obtain proper identification, they must withhold the higher "backup withholding."
The "backup withholding" rate is 28% of a prize.
If an organization awards a single charity game ticket prize of $600 or greater and the prize winner fails to provide proper identification, the organization must retain the "backup withholding of 28%."
EXAMPLE: Organization XYZ paid a prize of $1,300. The winner would only give his name as J. Doe and did not provide proper identification. Organization XYZ should collect backup withholding of $364 ($1,300 x 28%), pay the winner $936 ($1,300 - 364), and file Form W-2G. If the winner had provided XYZ with proper identification (including social security number), no withholding would be required; however, the organization would still be required to file Form W-2G.
SINGLE PRIZE: The IRS considers all prizes won by one wager a single prize.
LIABILITY: The organization is liable for paying the applicable backup withholding to the IRS, regardless of whether or not it is collected from the prize winner. The best time to collect backup withholding is before the prize is paid! Organizations must report withholdings on Form 945 by January 31 of the following year.
http://www.corvettemuseum.com/raffle/rules.htm
Winner agrees to pay 25% federal income tax withholding to the National Corvette Museum prior to release of the Corvette or any other prize. National Corvette Museum will submit the taxes collected to the IRS. After the end of the year, the Museum will file a form W-2G with the IRS to report the value of the prize won and the taxes paid in by the winner. The winner will receive a copy of this also.
The IRS guideline that specifies that the organization conducting the raffle for a prize greater than $5,000 is OBLIGATED to collect the taxes. The NCM had to apply for a Charitible Gaming License in order to conduct these raffles. Based on the below IRS guideline that they have NO choice but to collect the money UP FRONT:
Federal Income Tax Withholding: Charity Game Ticket Prizes
IDENTIFICATION: The winner of a single charity game ticket prize of $600 or more must provide the organization with proper identification. Two types of identification (e.g. driver license, social security card, voter registration card, etc.) should be furnished by the winner to verify his or her name, address, and social security number (SSN).
W-2G: If an organization awards a single charity game ticket prize of $600 or more, they must file Form W-2G.
WITHHOLDING: It is important that organizations understand the difference between "regular gambling withholding" and "backup withholding" of federal income tax.
The "regular gambling withholding" rate is 25% of a prize.
If an organization awards a single charity game ticket prize with a value between $600 and $5,000 and the prize winner provides proper identification, no withholding is required.
If the prize amount is more than $5,000, the organization must obtain proper identification from the winner (as described above) and withhold 25% of the prize. If the organization is unable to obtain proper identification, they must withhold the higher "backup withholding."
The "backup withholding" rate is 28% of a prize.
If an organization awards a single charity game ticket prize of $600 or greater and the prize winner fails to provide proper identification, the organization must retain the "backup withholding of 28%."
EXAMPLE: Organization XYZ paid a prize of $1,300. The winner would only give his name as J. Doe and did not provide proper identification. Organization XYZ should collect backup withholding of $364 ($1,300 x 28%), pay the winner $936 ($1,300 - 364), and file Form W-2G. If the winner had provided XYZ with proper identification (including social security number), no withholding would be required; however, the organization would still be required to file Form W-2G.
SINGLE PRIZE: The IRS considers all prizes won by one wager a single prize.
LIABILITY: The organization is liable for paying the applicable backup withholding to the IRS, regardless of whether or not it is collected from the prize winner. The best time to collect backup withholding is before the prize is paid! Organizations must report withholdings on Form 945 by January 31 of the following year.
