Curious about charity running sweepstakes

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Subject Author Date Curious about charity running sweepstakes Barry Margolin 06-15-2009  Re: Curious about charity running sweepstakes Paul Thomas 06-15-2009  Re: Curious about charity running sweepstakes D. Stussy 06-16-2009  Re: Curious about charity running sweepstakes Paul Thomas, CPA 06-16-2009  Re: Curious about charity running sweepstakes Seth 06-17-2009  Re: Curious about charity running sweepstakes Paul Thomas, CPA 06-17-2009  Re: Curious about charity running sweepstakes 123go 06-17-2009  Re: Curious about charity running sweepstakes Seth 07-02-2009  Re: Curious about charity running sweepstakes 123go 06-16-2009  Re: Curious about charity running sweepstakes Arthur Kamlet 06-16-2009  Re: Curious about charity running sweepstakes Bob Sandler 06-16-2009  Re: Curious about charity running sweepstakes Barry Margolin 06-17-2009  Re: Curious about charity running sweepstakes dpb 06-17-2009  Re: Curious about charity running sweepstakes Stuart A. Bronstein 06-17-2009  Re: Curious about charity running sweepstakes Barry Margolin 06-17-2009  Re: Curious about charity running sweepstakes D. Stussy 06-17-2009
Posted by Barry Margolin on June 15, 2009, 8:22 pm Please log in for more thread options One of our local NPR stations has been advertising that if you pledge by tomorrow you'll be entered in a drawing to win a trip to see "Wait, Wait, Don't Tell Me" in Chicago. That got me curious about the tax treatment of this. If you make a donation to a charity and receive a premium in return, you're supposed to reduce the amount you deduct by its value. How does this work in the case of a drawing? If the prize is worth $1,000, and there are 1,000 entries, is the value of the premium $1 for each of them, or does the winner get $1,000 in income that he would have to report (minus his contribution)? -- Barry Margolin, barmar@alum.mit.edu Arlington, MA *** PLEASE don't copy me on replies, I'll read them in the group *** -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Paul Thomas on June 15, 2009, 10:26 pm Please log in for more thread options > One of our local NPR stations has been advertising that if you pledge by > tomorrow you'll be entered in a drawing to win a trip to see "Wait, > Wait, Don't Tell Me" in Chicago. That got me curious about the tax > treatment of this. > > If you make a donation to a charity and receive a premium in return, > you're supposed to reduce the amount you deduct by its value. How does > this work in the case of a drawing? If the prize is worth $1,000, and > there are 1,000 entries, is the value of the premium $1 for each of > them, or does the winner get $1,000 in income that he would have to > report (minus his contribution)? The winner receives income for the value of the prize. The station should issue a 1099 - but often times this gets overlooked. Also, in some states or localities there is a registration process for these types of gaming activities. Georgia requires it, and I suspect other states may also. -- Paul A. Thomas, CPA Athens, Georgia -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by D. Stussy on June 16, 2009, 9:50 am Please log in for more thread options > > One of our local NPR stations has been advertising that if you pledge by > > tomorrow you'll be entered in a drawing to win a trip to see "Wait, > > Wait, Don't Tell Me" in Chicago. That got me curious about the tax > > treatment of this. > > > > If you make a donation to a charity and receive a premium in return, > > you're supposed to reduce the amount you deduct by its value. How does > > this work in the case of a drawing? If the prize is worth $1,000, and > > there are 1,000 entries, is the value of the premium $1 for each of > > them, or does the winner get $1,000 in income that he would have to > > report (minus his contribution)? > > The winner receives income for the value of the prize. > > The station should issue a 1099 - but often times this gets overlooked. > > Also, in some states or localities there is a registration process for these > types of gaming activities. Georgia requires it, and I suspect other states > may also. Why not a W-2G? Granted they aren't in the business of wagering, but this income is proceeds from gambling where the proceeds exceeded 200x the bet. However, a pool of $500 with 1,000 entries worth $1 each is more appropriate for a charity as it then pockets $500 for its charitable purpose. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Paul Thomas, CPA on June 16, 2009, 10:27 am Please log in for more thread options > Why not a W-2G? Granted they aren't in the business of wagering, but this > income is proceeds from gambling where the proceeds exceeded 200x the bet. I don't know if raffles done by a charity are considered gambling. > However, a pool of $500 with 1,000 entries worth $1 each is more > appropriate for a charity as it then pockets $500 for its charitable > purpose. The only way to make real money on these types of things is to get the prize donated of at a seriously reduced price to the charity. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Seth on June 17, 2009, 3:43 pm Please log in for more thread options >The only way to make real money on these types of things is to get the prize >donated of at a seriously reduced price to the charity. If the prize is sold at a reduced price, is that the Fair Market Value the winner is taxed on? ("Full list price" is typically a joke.) Seth -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Similar Threads Posted Curious: are legal costs added to property basis? April 11, 2008, 3:01 pm charity March 4, 2007, 8:50 pm Charity Travel June 20, 2008, 6:20 pm 401k to charity October 5, 2009, 12:50 pm travel expenses for charity December 4, 2006, 5:57 pm Another Charity Mileage Question. 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