Oprah car winners hit with hefty tax - VeggieBoards
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#1 Old 09-23-2004, 07:18 AM
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#2 Old 09-23-2004, 07:21 AM
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Hmm, I wonder if Oprah knew about the tax before she planned to give those cars away. I guess it's still much cheaper than paying for a new car, but $7,000 is still a lot of dough.
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#3 Old 09-23-2004, 07:28 AM
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I guess I would sell it, pay the tax, and buy a less expensive car. (I need a car though). If I didn't need a car, I would just sell it and keep the difference.
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#4 Old 09-23-2004, 08:01 AM
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I read the CNN article. It seems to me that there's a loophole they're missing. The cars weren't a prize. There was no contest for the cars...everyone got one. They were a gift and therefore the value shouldn't be considered income in my opinion.



ETA: It's not like the IRS is knocking on their door for a check right now. They'll get a form in the mail in January reporting the value and informing the recipients that they need to roll the value up into their income. Hopefully some folks can offset the amount so it's not so much.
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#5 Old 09-23-2004, 08:35 AM
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Quote:
Originally Posted by MsRuthieB View Post

I read the CNN article. It seems to me that there's a loophole they're missing. The cars weren't a prize. There was no contest for the cars...everyone got one. They were a gift and therefore the value shouldn't be considered income in my opinion.



ETA: It's not like the IRS is knocking on their door for a check right now. They'll get a form in the mail in January reporting the value and informing the recipients that they need to roll the value up into their income. Hopefully some folks can offset the amount so it's not so much.





Yes, but i believe the law is you can receive a gift tax free if its value is under 10 thousand dollars. Anything over that amount and you must pay a tax. So, you're right, there is a loophole! However, they will still have to pay something.
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#6 Old 09-23-2004, 08:42 AM
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When this story first came out I wondered about that, but I heard Oprah was going to pay the tax, too. http://money.cnn.com/2004/09/13/news/newsmakers/oprah/



but I guess those were only local and state taxes. Oops. Even taxes had occured to me.
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#7 Old 09-23-2004, 09:05 AM
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Originally Posted by Gothic Sponge View Post

Yes, but i believe the law is you can receive a gift tax free if its value is under 10 thousand dollars. Anything over that amount and you must pay a tax. So, you're right, there is a loophole! However, they will still have to pay something.





The donor is generally responsible for paying the gift tax, not the recipient. Read here on the IRS's site.



ETA: This may be why Oprah is classifying it as a prize rather than a gift. She'll be responsible for issuing 1099's showing the fair market value to all that received the cars before Jan. 31, 2005. It'll be included as 'other income' on their individual tax filings.
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#8 Old 09-23-2004, 09:20 AM
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This is why I want to only win things in Canada
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#9 Old 09-23-2004, 09:32 AM
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Quote:
Originally Posted by MsRuthieB View Post

The donor is generally responsible for paying the gift tax, not the recipient. Read here on the IRS's site.



ETA: This may be why Oprah is classifying it as a prize rather than a gift. She'll be responsible for issuing 1099's showing the fair market value to all that received the cars before Jan. 31, 2005. It'll be included as 'other income' on their individual tax filings.





You're right! My bad.
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#10 Old 09-23-2004, 09:36 AM
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The sad thing is, even if folks sell these for the tax money, what happens if someone spends the windfall??? Then come April 15th, they owe the IRS between 3-7K and they don't have it.
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#11 Old 09-23-2004, 09:53 AM
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Weird. The report I heard the day it made the news is that Pontiac was paying for everything, including the taxes...
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#12 Old 09-23-2004, 09:55 AM
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I believe if you anticipate owing the govenment you can pay before the year is out. Here's another thing. If you end up owing the IRS more than a certain percentage of your income you are penalized for underpayment of taxes. So, it would be to their advantage to pay it before 12/31/04. These folks need to talk to a tax advisor..problem is that most of them probably don't have the fund to pay for advice. I suppose they could just call the IRS and get an opinion on when to pay. If it was me, I'd pay it before the end of the year to avoid the possible penalty. If you overpay they'll issue a refund.
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#13 Old 09-23-2004, 09:56 AM
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If Pontiac is paying then they must be calling it a gift rather than a prize. That's good.
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#14 Old 09-23-2004, 01:48 PM
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If Pontiac isn't paying the taxes then this is Oprah's turn to put up or shut up. If the cars were donated then I think Oprah can afford the 30 x $7,000 = $210,000.



But... If the car is considered a gift then wouldn't paying $7,000 for the taxes be considered a gift as well? Would they then have to pay taxes on the $7,000?

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#15 Old 09-23-2004, 03:16 PM
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Quote:
Originally Posted by Michael View Post

If Pontiac isn't paying the taxes then this is Oprah's turn to put up or shut up. If the cars were donated then I think Oprah can afford the 30 x $7,000 = $210,000.

She has the money either way, but it's not 30 cars, it's 276 cars.
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#16 Old 09-23-2004, 03:32 PM
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Originally Posted by mikie View Post

She has the money either way, but it's not 30 cars, it's 276 cars.



Ooops. I don't know where I came up with that number. I'm sure it'll be taken care of either way.

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#17 Old 09-24-2004, 04:16 AM
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Quote:
Originally Posted by Michael View Post

If Pontiac isn't paying the taxes then this is Oprah's turn to put up or shut up. If the cars were donated then I think Oprah can afford the 30 x $7,000 = $210,000.



But... If the car is considered a gift then wouldn't paying $7,000 for the taxes be considered a gift as well? Would they then have to pay taxes on the $7,000?



No. If the cars are a gift then Oprah would simply be executing her responsibilty by paying the $7000 per as they are her liability as the gift giver.
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