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My friend won a car, how much tax would I have to pay

Sent to Tax Experts July 15 2006 at 3:38 PM
   

My friend won a car, how much taxes would she have to pay from selling the car?

 

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Santa Fe, New Mexico

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Customer (name blocked for privacy)
Status:  Closed   Value: $8
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July 15 2006 at 3:45 PM (7 minutes and 1 second later)
         
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Congratulations to your friend!

Tax will be due based on the value of the car and will be listed on Form 1099. This will be taxed at their ordinary income tax bracket rate.

Your friend should obtain a quote from another reliable source of the fair market value of the car on the date of the win. They can use the LOWER OF the quoted fair market value OR the amount listed on the 1099. The amount on the 1099 is usually much higher as promotional fees, etc are added to the value making it appear to be a larger payout.

If the quoted value is lower, they should keep this written quote with their tax records. They should attach a statement to their tax return explaining how they determined the lower value and a copy of the 1099 and enter on Line 21 of their Form 1040 only the lower amount.

Expenses to receive the prize (entry fee, etc) may be deductible on Schedule A if their total itemized deductions are more than their standard deduction.



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Sandi Hargrove, SkyHawks -- Master Tax Advisor, Enrolled Agent -- 99% Positive Feedback on 1208 Tax Accepts
I am a Master Tax Advisor and Enrolled Agent. I have 40 years experience. Trucking specialist.
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July 15 2006 at 3:51 PM (5 minutes and 25 seconds later)
         
Reply to Sandi Hargrove, SkyHawks's Post: That did not answer the question. The casino paid the taxes on the car when it was won. But now she is going to turn around and sell it. We need to know how much it would be if she sold it for 35,000?
Customer (name blocked for privacy)
Answer
July 15 2006 at 3:58 PM (6 minutes and 57 seconds later)
         
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Sandi Hargrove, SkyHawks -- Master Tax Advisor, Enrolled Agent -- 99% Positive Feedback on 1208 Tax Accepts
I am a Master Tax Advisor and Enrolled Agent. I have 40 years experience. Trucking specialist.
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