Car giveaway taxes


Enuea

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I was watching Tunercult on instagram live earlier today and someone asked them about taxes on the cars they give away and the guy was saying that they don't collect the tax amount on the cars when they deliver them to the winners. Instead, the winners pay the taxes during tax season. My question is, does IRS calculate the tax based on the car's value and the winner pay the lumpsome amount while filing their taxes?
 

IceCreamAssassin

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I was watching Tunercult on instagram live earlier today and someone asked them about taxes on the cars they give away and the guy was saying that they don't collect the tax amount on the cars when they deliver them to the winners. Instead, the winners pay the taxes during tax season. My question is, does IRS calculate the tax based on the car's value and the winner pay the lumpsome amount while filing their taxes?
I’m sure it’s different for every state. Here in IL when you take the title to register the vehicle in your name they will have you pay taxes based off the value then.
 

Turtle

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No way am I'm an experr but similar to Oprah giving away stuff.

I'm guessing that tunercult reports they gave away a car.

They will obviously hype up the price. Say a $100k Scion FRS they are giving away. So technically you were given $100k car? So ball park $10k to the IRS. And then you pay local state tax thru DMV when you register.
 

IceCreamAssassin

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I don’t know if you’d have to pay a separate tax to the irs. If you register it in your name and keep the car then, the state tax should take care of it. If you don’t and just sell it then you would owe the irs for capital gains tax I think? This is me just guessing and not doing any research. I’m sitting by an accountant so maybe he will know.
 

IceCreamAssassin

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So I guess you’d also have to pay income tax on it which could be like 24% or so. Which is why some probably give you cash on top cause most people can’t afford the instant hit.
 

GLADIATOR

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When I worked at a Budweiser wholesaler, they gave away several cars. You get a 1099 with the sticker price of the car or what they paid for it. At the end of the year you claim it as income. That’s when you pay the taxes on it. Depending on your tax situation you could absorb it and minimize the taxes. Most of the guys that won them would sell them right away anyway and take the cash.
 
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Enuea

Enuea

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This is an interesting topic because I didn't know all of this.
 

Thirdgen89GTA

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So, for most give aways, I'd take cash equivilent, or sell the car without ever taking ownership of it. Then they can take the tax out of the income earned from selling it.

If I really wanted to keep the car, and the taxes were more than I had liquid cash, I'd take a personal loan to pay for it. You'd leverage the car against the loan I think is how it works. So the banks would love that, because you default on a $25k loan, and they keep a Ferrari.

Thought, at this point in my life, I'd probably just sell the car, and net the profit after taxes. Least risk greatest profit.
 

Mook

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It's a good question. So many sites and IG pages do this now. I had a friend who's parents actually won a C8 and a 62 from one of the IG pages. Sold the 62 on BAT for 85+.
 

Thirdgen89GTA

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It's a good question. So many sites and IG pages do this now. I had a friend who's parents actually won a C8 and a 62 from one of the IG pages. Sold the 62 on BAT for 85+.
In this market? If I won a C8, I'd SELL instantly.

I'd start he auction at MSRP+estimated auction fees, and let them bid the fuck out of it. Take the money, pay the taxes and let it sit in a bank.

Then put the money down on a C8 Z06. :)
 

N20GT

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No way am I'm an experr but similar to Oprah giving away stuff.

I'm guessing that tunercult reports they gave away a car.

They will obviously hype up the price. Say a $100k Scion FRS they are giving away. So technically you were given $100k car? So ball park $10k to the IRS. And then you pay local state tax thru DMV when you register.
$10k is wayyyyy low, It’s taxed like income. As prev stated, you get a 1099 from the org that you won the car from

that’s why I crack up when I see people hosting raffles with all kinds of online paper trails, profiting 5 figures for themselves, not having the winner pay tax and not paying tax themselves. You’re playing with some major fire there
 

Mr_Roboto

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Gotta ask does DLD 1099 ppl? Some of those guns are pretty pricey...........
 

blue-sun

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I have entered a handful of "buy this keychain for $45 and 1 lucky winner will also get a car" and in the fine print for the site, the car's value, regardless of the car (skyline, GTI, MR2, WRX, etc) always seemed to say "$4999" which I'm assuming is a way togo around having to pay huge tax bills.

https://primedrivendaily.com/ is one of the sites, they're giving away a S2000 right now worth "$4500".

  1. GRAND PRIZE: One (1) Grand Prize will be available to be awarded. The Grand Prize winner ("Prize Winner") will receive a 2001 Honda S2000, with an Approximate Retail Value ("ARV") of $4,500. The vehicle has been used and has an odometer reading approximately 152,000 miles. The vehicle options will be selected by the Sponsor in its sole discretion. The Prize Winner will be solely responsible for: any additional equipment, title, vehicle registration fee, dealer documentation fee, license delivery, dealer prep, freight, emissions inspection, federal, state and local taxes, insurance, gasoline, vehicle maintenance and all other fees and expenses associated with receipt and use of the prize vehicle. Any additional vehicle options will be the responsibility of the Prize Winner. Prize Winner understands aforementioned prize vehicle may not pass smog testing in certain states; winner should check standards for operation of a vehicle in their state before accepting prize. The Prize Winner must provide proof of valid insurance and a valid driver’s license to take delivery and must take delivery at the location designated by Sponsor within thirty (30) days. Prize Winner is responsible for his/her own travel plans, coordination, and expenses associated with travel to pick up the car from the designated dealer location. The Total Prize Pool value is $4,500.
 

CMNTMXR57

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Some are also giving away a substantial amount to cover the taxes.

I signed up for this. They will pay an additional $17k for taxes. So when I go title it, pay Gov Pritzker his pittance, I would calculate the vehicle's worth to arrive at $17k, call that my purchase price just use the proceeds from them.

 

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