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Old 10-03-2009, 01:18 AM   #1
mgtr
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Default What are the tax implications of winning a car in CM raffle?

I have wondered for some time how this workds. Is the value of car considered regular income (bummer) or is it tax free? I would be willing to buy a ticket or two for a GS vert if it is tax free, but not if I have to pay significant income tax on it. Thanks for any info.
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Old 10-03-2009, 01:20 AM   #2
chiefzusaf
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you need to come back in out of the sun...
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Old 10-03-2009, 01:28 AM   #3
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Yea, I agree. When I won that lottery thing a few years ago, they said they couldn't pay me the money all at once, but over a 20 year period! I can't wait that long so I told them to just give me my dollar back!
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Old 10-03-2009, 01:29 AM   #4
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No free lunch even with the NCM raffles. You would have to pay taxes on the retail value of the car. I can't qoute an exact figure but plan on a few grand and that could be on the low side. When I buy raffles tickets I don't expect to win. I just consider it a donation. Good luck.
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Old 10-03-2009, 01:30 AM   #5
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Nothing in life is free... You pay tax on the win. I'll let our more accounting savy members chime in, but I believe you will pay federal and state tax. The amount likely depends on your current income.

In any event, if you win and want to keep the car, have a nice stash in your savings. Otherwise, it will be for sale, or your current ride.

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Old 10-03-2009, 01:31 AM   #6
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See "Prizes and Awards" near the bottom of the page:

http://www.irs.gov/newsroom/article/...175963,00.html

Z//
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Old 10-03-2009, 01:36 AM   #7
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Quote:
Originally Posted by Zoxxo View Post
See "Prizes and Awards" near the bottom of the page:

http://www.irs.gov/newsroom/article/...175963,00.html

Z//
So, winning a $50K car in a raffle is the same as earning $50K additional . That takes some of the fun out of it. Still, it is better than a kick in the head!
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Old 10-03-2009, 01:55 AM   #8
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Quote:
Originally Posted by mgtr View Post
So, winning a $50K car in a raffle is the same as earning $50K additional . That takes some of the fun out of it. Still, it is better than a kick in the head!
"Subject to certain exceptions, the cash value of prizes or awards won in a drawing, quiz show program, beauty contest, or other event, must be included on the tax return as taxable income."

The CM will issue a 1099 to the winner.
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Old 10-03-2009, 02:09 AM   #9
Charles Gerughty
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Let me get this straight. If you won a $50,000 Corvette; had a marginal tax rate of say 30%, you would be upset if you had to pay $15,000 in taxes. Give the car to me and I'll pay your tax liability.
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Old 10-03-2009, 02:12 AM   #10
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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...
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Old 10-03-2009, 02:13 AM   #11
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you will pay tax on the retail value of the car when you pick it up at the ncm. this is covered on the website. failure to pay tax will forfeit your prize..................
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Old 10-03-2009, 02:19 AM   #12
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Quote:
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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...
Two ways around this:

Sell the home and take the $250,000 (single) or $500,000 (joint) primary residence gain exemption or, if you qualify, simply refinance the house to pay the taxes.
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Old 10-03-2009, 02:42 AM   #13
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I won mine back in late 2005 and all tax, including the sales tax and capital gains tax was around 20k for a car with a sticker of 56000 in the state of California. It was a fully optioned 06.
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Old 10-03-2009, 06:40 AM   #14
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Quote:
Originally Posted by Shortimer View Post
No free lunch even with the NCM raffles. You would have to pay taxes on the retail value of the car. I can't qoute an exact figure but plan on a few grand and that could be on the low side. When I buy raffles tickets I don't expect to win. I just consider it a donation. Good luck.
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Old 10-03-2009, 06:54 AM   #15
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Yup on the taxes. I'd still do it. After all, when you get a 50K car and pay the 15K in taxes you still make out with 35K (well, maybe not in this market...).
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Old 10-03-2009, 07:02 AM   #16
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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.
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Old 10-03-2009, 07:06 AM   #17
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It depends on your state's tax laws and, of course, specific federal tax laws. The way I have experienced this is that the fair market value of the car (as determined by who is giving it on a 1099 tax form they send into the IRS after the prize is awarded) is added right on top of the winner's income.

In most cases (but not all) there are also sales taxes to be paid. In the case of a manufacturer's award of one of their own products, you may not have to pay sales taxes since the product was never sold to anyone.

Best of luck!
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Old 10-03-2009, 07:11 AM   #18
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There are some raffles out there that do pay the taxes.

Where are those two Vettes offered? They pay the tax.
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Old 10-03-2009, 07:12 AM   #19
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Quote:
Originally Posted by mgtr View Post
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.
I want to talk with YOUR tax atty!
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Old 10-03-2009, 08:17 AM   #20
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Quote:
Originally Posted by mgtr View Post
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.
Well...take one for the team Al. Win it and then donate it for free on this forum and make somebody super-happy...whoever wins will obviously reimburse you for the taxes of course

Since you have such a great tax tax attorney why didn't you ask this question to him/her?
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Old 10-03-2009, 08:17 AM
 
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