| RussMS |
09-08-2005 08:19 AM |
Quote:
Wonder what taxes would be on a car like that?
|
Per IRS:
Quote:
Winnings from lotteries and raffles are gambling winnings. In addition to cash winnings, you must include in your income bonds, cars, houses, and other noncash winnings at their fair market value.
|
But if you won it one of the following would likely happen:
Per IRS:
Quote:
Noncash payments. A noncash payment, such as a car, must be taken into account at its fair market value (FMV) for purposes of reporting and withholding. If the FMV exceeds $5,000, after deducting the price of the wager, the winnings are subject to 25% regular gambling withholding. The tax you must withhold is computed and paid under either of the following two methods:
1. The winner pays the withholding tax to the payer. In this case, the withholding is 25% of the FMV of the noncash payment minus the amount of the wager.
2. The payer pays the withholding tax. In this case, the withholding is 33.33% of the FMV of the noncash payment minus the amount of the wager.
|
So lets assume the winner pays and the FMV is the $40,000: Taxes to be paid by the winner (when they win): $10,000. That will go up or down when the tax return is filed on April 15. If you didnt pay it when you won you would likely have to pay it when you file your taxes.
I would argue though that the Fair Market Value of the vehicle is the same as the cash option or a sales price if sold for less than the stated Fair Market Value.
There is more than you probably ever wanted to know Andrew :D |
