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Posted by NadCixelsyd on October 25, 2007, 5:01 pm
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Last spring, a Massachusetts furniture store offered to
refund your money on select furniture (bedroom sets?) if the
Red Sox won the World Series. Sales surged. The furniture
store covered themselves with an insurance policy, "That
way, we're rooting for the Red Sox, too".
Way back in March, the Red Sox probably had an 10% chance of
winning. At this point, I think the Red Sox have about a 70%
chance of winning. What are the income tax implications for
the furniture buyers if the Red Sox do win?
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Posted by kastnna on October 26, 2007, 11:52 pm
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> Way back in March, the Red Sox probably had an 10% chance of
> winning. At this point, I think the Red Sox have about a 70%
> chance of winning. What are the income tax implications for
> the furniture buyers if the Red Sox do win?
For starters, those insurance policies aren't really that
unusual. Those half court basketball shots they give away a
million bucks for... the free $60k Cadillac to the PGA
golfer that makes a whole in one... They're mostly covered
by insurance policies. There are dozens of companies out
there that make it their sole business to ensure promotional
contests.
As for the tax implications, what exactly do you mean? I
would think that the insurance premium(s) are a business
expense, any claim payouts are reported as income to the
business and in this case are offset by a presumably
equivalent business expenses (refunds to customers). Its all
just a bunch of credits and debits on the company books.
Maybe I'm missing what you are really asking? If so, please
enlighten me.
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
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<< that may be imposed upon the taxpayer. >>
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Posted by Paul Thomas, CPA on October 26, 2007, 11:52 pm
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> What are the income tax implications for
> the furniture buyers if the Red Sox do win?
A "gift" from God ????
--
"A celebrity is a person who works hard
all his life to become known, then wears
dark glasses to avoid being recognized."
Fred Allen
--
Paul A. Thomas, CPA
Athens, Georgia
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<< The foregoing was not intended or written to be used, >>
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<< that may be imposed upon the taxpayer. >>
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Posted by Dick Adams on October 26, 2007, 11:52 pm
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> Way back in March, the Red Sox probably had an 10% chance of
> winning. At this point, I think the Red Sox have about a 70%
> chance of winning. What are the income tax implications for
> the furniture buyers if the Red Sox do win?
Seems to me that you have a "conditional rebate" which I
suspect is not taxable income. The seller buried the
insurance premium in the price of the furniture and, thus,
you effectively paid for the insurance.
I seriously doubt that he can refund your sales tax cause
it's those sales tax auditors who give the rest of us a bad
name.
This is an excellent marketing ploy because it brings in
customers who might not have come otherwise and it cuts down
on negotiations. Unfortunately it is probably ineffective
in most cities with alleged MLB teams (Baltimore, Washington,
Pittsburgh, Kansas City, etc.)
<< ------------------------------------------------------- >>
<< 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. >>
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<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
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Posted by Seth on October 28, 2007, 5:13 am
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>> Way back in March, the Red Sox probably had an 10% chance of
>> winning. At this point, I think the Red Sox have about a 70%
>> chance of winning. What are the income tax implications for
>> the furniture buyers if the Red Sox do win?
> Seems to me that you have a "conditional rebate" which I
> suspect is not taxable income. The seller buried the
> insurance premium in the price of the furniture and, thus,
> you effectively paid for the insurance.
"Insurance" or "gambling"? Does the refund count as
gambling winnings? (What is the insurable interest of the
furniture _buyers_? I suppose if they _sold_ the Red Sox
winning, against their furniture purchase, that would be
hedging.)
I would think it does count as income of some sort.
A partial refund might not. I've known stores to offer
"Random percentage (10%-90%) off" sales, where you pick a
slip to learn your discount after the goods are rung up.
The price paid is just a sale price, not a taxable event.
Seth
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<< The Charter and the Guidelines for submitting posts >>
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