At 03:14 PM 5/2/02 EDT, Wirt Atmar wrote:
>Larry asks:
>
>> I've always wondered how game show contestants would be taxed when they win
>>  something.  Say they won a car that has a MSRP of $35,000.00  The
>contestant
>>  immediately puts an add in the paper wanting to sell the vehicle and
states
>>  the price is $35,000.00 or 'best offer'.  Since msrp is always an inflated
>>  price, if the vehicle sells for $26,500 would the IRS tax at the msrp or
>the
>>  $26,500.00 ?
>
>In this case, the answer's easy. If you sold the $35,000 car you won in a
>game show for $26,500, you must report its value as $35,000. The game show
>turned in a form 8283 to the IRS when you took possession of the car,
>reporting the car as as $35,000 equivalent income to you. You must therefore
>report the same income value. Income and expenses must balance. The fact that
>you sold the car for $26,500 isn't relevant except for the fact that you were
>willing to take a loss on the transaction as a whole.

There are forms to file, however, explaining why your reported income
doesn't match form 8283, or 1099, or whatever.  There are valid reasons for
differences, and hence, valid exceptions to the rule.
John Lee
HP Account Executive
Vaske Computer Solutions
Minneapolis, MN
952-844-0054

We sell, service, support and integrate HP 3000/9000 and related hardware,
new and old, since 1988

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