I try to add tax blog articles weekly on tax topics that may be interesting to you. Please browse. If there is a topic you would like to see here or would like to more information on, please contact me.

Find Out More

My Tax Blog

Prizes Are Taxable?
September 25, 2019   |   Collection, Form 1040, Gift, IRS, Tax Due, Tax Resources

Tahoe utility setting at the water's edge of a beach

As a high school student discovered in the Conyers case. A car dealership held a competition for high school seniors who had perfect attendance and/or good grades.  Schools submitted names of qualifying students and the dealership held a drawing for a new car.

The student accepted the new vehicle, but didn’t report the income on her tax return because she thought it was a non taxable “gift”.  The student appealed to US Tax Court and lost. The Court ruled that the car was a taxable prize.

What if a person didn’t win a car but something else?  The same principle applies. The fair market value of the prize is taxable income unless the IRS specifically exempts the transaction from taxation.

So watch those prizes, the taxes can come back to “bite” . .

Continue Reading