Raffle prize won - flip to charity

[hjltax]

I seem to remember that if you won a prize (client won a car) in a charity raffle and you turned around and donated the prize, you did not have to realize income. Am I right? Anyone have a reference to this under code or regs, etc? Would an 8283 have to be filed? What about add'l expenses like taxes and such that had to be paid in order to receive the prize? Vehicle will not be registered by the taxpayer.

[New York Enrolled Agent]

I seem to remember that if you won a prize (client won a car) in a charity raffle and you turned around and donated the prize, you did not have to realize income. Am I right? Anyone have a reference to this under code or regs, etc? Would an 8283 have to be filed? What about add'l expenses like taxes and such that had to be paid in order to receive the prize? Vehicle will not be registered by the taxpayer.

I believe you are thinking about §74(b) which allows for an exclusion from gross income for CERTAIN prizes and awards. Given the facts of your post, I don't believe your client would qualify under this code section. The exclusion, IMO is not for a casual prize in a charity raffle but for prizes awarded in recognition of religious, scientific, etc. achievement.

Winning the car is not the same as winning the Nobel prize.

[gkaiseril]

If one bought the raffle ticket in the organizations name, then you did not receive the prize and would not need to report the income.

But if one bought the ticket in one's name and received the notice of winning, constructive receipt of the prize, one is liable for the income tax. Now if one donates the prize to the organization, then one would claim the contribution as a charitable contribution.

[ChEAr$]

Winning the car is not the same as winning the Nobel prize.

Yet for some people, equally momentous! (grin

[ChEAr$]

If one bought the raffle ticket in the organizations name, then you did not receive the prize and would not need to report the income.

But if one bought the ticket in one's name and received the notice of winning, constructive receipt of the prize, one is liable for the income tax. Now if one donates the prize to the organization, then one would claim the contribution as a charitable contribution.

Buy a raffle ticket in an organization's name? Just how do you DO that? Unless you
contribute the ticket price to the organization and get a receipt, and then the organization
buys the ticket, at least if the organization is a tax exempt charity you get a deduction
for the contribution.

But if the organization is the same one raffling the prize... huh?

[Black Bart]

Some people

...Winning the car is not the same as winning the Nobel prize.

would argue that the latest one was awarded for not much more effort.

[outwest]

While I agree with the step transactions above..

at least initially, I got to wondering if the situation changes if the winner declines the prize? In the estate world, no one can force you to inherit, a bequest can be "disclaimed". I don't think anyone can be forced to accept a gift.

So if your name is drawn out of a hat, do you have to accept the prize?

And if you unconditionally decline the prize, do you have income?

[BOB W]

at least initially, I got to wondering if the situation changes if the winner declines the prize? In the estate world, no one can force you to inherit, a bequest can be "disclaimed". I don't think anyone can be forced to accept a gift.

So if your name is drawn out of a hat, do you have to accept the prize?

And if you unconditionally decline the prize, do you have income?

Good point.... the winner does not have to give his SS# if he declines the winnings.

[gkaiseril]

Buy a raffle ticket in an organization's name? Just how do you DO that? Unless you
contribute the ticket price to the organization and get a receipt, and then the organization
buys the ticket, at least if the organization is a tax exempt charity you get a deduction
for the contribution.

But if the organization is the same one raffling the prize... huh?

Instead of putting your name on the drawing stub or registration, enter the organizations name.