- quote -

There is no way this is considered a "gift", as in the kind
that you can give to another person and be exempt from the
gift tax under $11,000. These prizes have a definite
business purpose and are an expense to the business that
runs the contest.

Recipients get a 1099MISC for the donor's estimate of the
value of the prize. It is often up to the recipient to try
to prove that the prize has nowhere near that value and
could not be sold for that amount. Often, it must be sold,
just to pay the taxes.

All freely provided advice guarantee correct or double your
money back

Frank S. Duke, Jr. CPA
Cincinnati, OH USA

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I've wondered if the recipients of the extravagent gifts
television shows are giving, ($3 million dollar wedding to
Ryan & Trista, $70,000 gift bags to presenters on award
shows, $500,000 makeover on Oprah) are subject to income tax
on the value of the proceeds? I would hope and think that
they are. If not, then there wouldn't be a deduction to the
donor as the business "gift" exceeds the maximum amount
allowable?

Appreciate the thoughts of others. Thank you.

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