if you win the give away car at L'VILLE

If you get real lucky and win the NSRA give away car at the L'ville nats, what does it cost the winner in taxes? Does the car come with a ***le? Is the cars value based on the donation of parts value? At a hot rod event last night and the subject came up, the answers and opinions were all over the place. ANY knowledgeable answers? BILL RINALDI

 

I don't think I would worry about it until they tell me that I am the winner of the car.

 

How safe is a car built by the lowest bidder?

 

A few years back, a local man won the giveaway car. After sales tax, income tax, and everything was paid, the FREE car cost him $29,800.

 

One thing you can count on. If you live in New Jersey you will pay sales tax if you try to register it !

 

Bingo!

 

........No wonder so many "free" give-a-way cars get sold right away.

 

car must have been valued at $100,000.00

 

Yes, and the donated parts are written off at list price,and so is the labor, then it is totaled up and is added to YOUR earnings for the year.

That IS why most of them get sold quickly.

 

It's a capital gain, so you'll be taxed on it according to your personal tax bracket. The value of the car (and therefore the taxes) will be determined by the people who give it away. Every receipt will be recorded, and there are really no "volunteer hours" when it comes to tax time. The maximum stated value will be on the paperwork, usually more than the market value.

This is the key reason you see so many giveaway cars for sale shortly after the contest, few can afford to keep them. This brings up a whole new question: If you win a car you don't love, can you justify paying the taxes to keep it?

 

Nope, but I can sell it and be that much closer to the purchase price of the car I do want!

 

ask for the cash money instead of the car

 

That's taxed too. Trust me, the tax man has people trained in getting into your **** as soon as you win something. There was a show about contests on 60 Minutes. One lady used the word "nightmare".

"Pimp My Ride", "Overhaulin"... yea, ya gotta pay tax on that ****.

 

Where's PeteJoe? He could answer this I think.

 

You have to remember that all that donated parts and work is billed out as a real job. This is done so the vendors can claim it on thier taxes. So the bill on the NSRA cars will total in excess of the $100K mark. Personal income tax will be collected by the IRS. You may be able to strech it out over a 5 year period. Sales tax and fees for your state will also be collected. A friend of mine won a new car in a contest at a local club. The $24000 car cost him about $8500
You will prob get a statement of origin for the car as it is a "new" car. You will prob have to fight with your state as how to ***le it.

 

I won a goodguys car. They put A value on the car that they sent to the IRS (w-2) I thought the amount they put on was fair. I was taxed when I did my taxes. Sold the car I did ok.

 

seems like there would be 20 guys hitting up the winner at every big show making lowball offers.

 

Dont even think of bringing it to Canada if a Canadian is the winner, grab the best cash offer then quickly leave !!!!!!!!!!!!!!!!!!!!

 

A fellow Tri-City Rod & Custom club member won the yellow '32 Ford Coupe give away car at the Shades of the Past several years ago,,you are responsible for all taxes and as I recall it cost him a bundle.

He kept it for a couple of years but eventually sold it. HRP

 

A Colorado guy won a Willy's coupe several years back. He had several high buck offers on the car before he even left the fairgrounds. He kept the car & drives it around to local shows. I have never heard him complain. Could you really turn one down?

 

Yeah,the same thing happened to Ed,,,but beware if you sign the papers after winning,,you will still have to pay taxes! HRP

 

Don't get me wrong, I'd happily accept it, but would be careful/aware that I would be paying about 50% of the stated value next April.

I've seen a few giveaway cars for sale immediately after the win at 1/2 of the stated price. I wonder if this is a tax attorney's advice, know what I mean?

You'd pay sales tax, license, registration, insurance, then capital gains. When you sell it (immediately or years down the road) you'll pay capital gains again i believe.

I'm no expert, so don't take my advice too literally. If you win consult a tax attorney, just know it WILL cost you about 30-50% the following April. And hopefully it will be worth it.

 

Here's an IRS publication on what happens when you win a raffle: http://www.irs.gov/pub/irs-tege/notice_1340.pdf Non cash prizes (like cars) are covered at the top of the second page.

From what I've read online, the tax hit is in the range of 1/4 to 1/3 of the car's value, but of course if you actually do win one you better talk to your tax man to get qualified advice.

 

The car won't have a ***le as its never been registered. You can bet the taxes will have to be paid. If I win it's for sale!

 

Ronald MacDonald house had a raffle for a Ford GT-40. It came with a tax warning, that you had 30 days to come up with $35K for the tax man.

 

Ok guys & gals, I'm going to tell you how it is, at least in Va. I won the 2008 car. You get no paper work with the car except for a bunch of disclaimers you sign. 1st of the year you get a 1099 from NSRA for what they spent on the car as unearned income. In my case a little over 25000. You pay it with your income tax. No car is mentioned. By the time I bought a ***tle, told DMV I payed 30 grand for the car, cost me a grand in ***leing tax but they didn't give me no h***le. After I insured it for 85000 and taged it I had almost 8,000 in it. The car is now for sale, but I've drove it since 08. I've put 11,000 miles on it and its been a good car but I can't afford 2 street rods and I've been driving my 47 chevy for 39 years. It ain't much, but it ain;t going now where. Its been good to me.

 

My parents won the NSRA car in '91. The tax amount they paid was well worth it for the car. There was some shakedown issues but there is with every new build. It has over 100k miles on it and they haven't been to many events in the last 5 years with it.

Jason

 

I won the GTO at the "1985 Hot Rod Nationals". Hot Rod Magazine was supposed to send me a 1099 but they never did. So I just took the "Old Cars Price Guide", number one condition of $8000 (can you believe that, remember this was in 1985) ands turned that in on my taxes. So it cost me maybe a couple thousand.
I still have it and it still looks the same.

 

It gets worse depending I suppose on which state you live in. For instance in Missouri if you would win a car not only do you pay the fed for your winnings but you also still have to pay state sales tax as well as income tax on the car in question.

It costs way less to win cash than to win property in this state.

 

what are they giving away this year?