rjm-1

So my brother in-law calls me and says, "Hey, I just won a car!' Really? What kind? It's a Red 2008 Corvette convertible". Yeah, they drew my name out of a barrel of tickets and I won.
He's not really into cars so he's giving the car to his wife for a daily driver. Geez, why doesn't stuff like this happen to me?? Don't get me wrong, I'm really happy for him. At least his wife has always loved sports cars and owned a Porsche so maybe she'll be lovin this car. Well, when she comes up this summer I'll introduce her to my black Z51!

07MontRedcp

Hope he can afford the taxes! and I don't mean sales tax.

BJK

corvettezman

Isn't taxes on winning somewhere in the 35% range of suggested value?
I have read somewhere that a lot of people on game shows like "the price is right " forfeit their winnings because they can't afford the taxes

07MontRedcp

Exactly.

BJK

VET4LES

MLS277

35% is pretty darn high, didn't know it was that much.

danl72

At that rate, based on $60,000 that is $21,000 in taxes. I hope he can afford to pay for it. Congrats to him anyway. At least he won something. That is more than I can say.

DaveC6

There should be an immediate withholding of 25% federal I believe, plus X% state if he's in a state with income tax. This is based on the "fair market value" of the prize. Then the fair market value will be added to his income for 2009. The 25% is withholding or an estimated payment not the actual tax. He may owe more depending on his other income, deductions, and withholdings. Then he may have to pay sales or use tax when it gets registered depending on his state. Not fun but I wish I had that tax problem.

dpigguy

believe that a lot of the stuff folks win are taxed as normal income which is why the folks on extreme makeover shows often need help paying for the upgrades they were given.

Blue Demon

What do you base this info on?

Snagle

Yep, will be taxed the same as if he were given that much cash. Still, awesome that he won. It's like buying the car with a 65% discount!

mgtr

For many folks, however, the question is can they sell the item for the after tax value. On a car, probably yes. On a bunch of furniture and vacations, probably no. So, just like on the Millionaire program (who remembers that?) the gift should be free of tax (ie, tax paid by giver). Now that would be a nice thing to receive! By the way, the man representing the millionaire giving money away was Michael Anthony. Who was the millionaire?

DaveC6

Income includes the fair market value of car won in raffle.
See Page 33 of IRS Publication 525, Lotteries and Raffles (middle of page 33).

http://www.irs.gov/pub/irs-pdf/p525.pdf

The organization running the contest is required to withhold at 25%. See page 1 of Instructions for Form W-2G, Regular Gambling Withholding – Noncash payments (right column near the bottom). The winner of the car would receive a Form W-2G.

http://www.irs.gov/pub/irs-pdf/iw2g.pdf

mgtr

The Millionaire was John Beresford Tipton.

cmnguye8

Well regardless; your getting the car at a much lower value.. and worst case scenario they can end up selling the car and still would make a profit

Wayne O

That's cool....I hope they enjoy their new Vette!

I'd love to win a new Corvette but I'm waiting to hit the big Powerball lottery. The trouble is I never remember to buy a ticket.

Not that I watch Oprah Winfrey but I believe that's what happend with the majority of recipients of her 'great car give-a-way a few years back. Most weren't prepared or able to pay the tax. I heard on some game shows the recipients 'divest' themselves of part of their winnings (merchandise, etc.) to offset the taxes on what they decide to keep.

You think 35% is high...haven't you seen what's going on in Washington? You ain't seen nothin' yet.

LMB-C6

I'm sorry, but I think that's just insane. Someone wins a car the most they should be liable for is the sales tax on the FMV when they register it...and even that's questionable.

AmmoVet

Check out the NCM Raffles rules and see.

corvettezman

Try winning the Lottery jackpot and see how much the IRS bites out of the winnings.
I am pretty sure that any Lottery winnings above $600.00 are taxable not just as income, but as winnings which is usually at a higher rate.

I know that in TN any winnings below the $600 threshold can be cashed at any participating outlet , but anything above $600.00 you will have to go to the lottery office to claim. And your SSN will be required to cash out

metal

I'm glad I never win anything!