the difference between oprah and TPIR is that in oprah's case, the cars were gifts, TPIR were winnings. I believe the tax rate on ALL winnings is 80% so he'd have to sell the scooter and one car in order to cover the tax bill on one car. If the total value of his winnings was $79,000.00, his tax bill would be around $64,000.00. He might not even have enough to cover the tax on one car, he might only be able to keep the scooter.....
Uh, no. Have a look at
http://www.irs.gov/publications/p525/ar02.html#en_US_publink100098473.
Gifts are tax exempt. Winnings from gambling, lotteries and raffles are taxable income. If Oprah's cars were gifts then the recipients wouldn't have had to pay tax on them. But Oprah gave each of them $6K for their tax troubles, so they must have been treated as lottery or raffle income. Otherwise, why would she give tax money for non-taxable 'gifts'?
Generally, you would take the fair market value of the prizes & add it to your other income. You the pay tax on that whole value amount and your tax rate will depend on what your total income is. Note that he would probably be able to deduct his 'gambling expenses' (ie. hotel & air fare to get to the show) from his 'gambling income' in determining his taxable income.
The 19 yr old won about $80K in cash & prizes. He's probably a student so it is reasonable to think that he has no other income. So he would have to pay taxes based on his annual income of $80K. That's probably in the 25% (??) rate in the US so I would assume his $26K in cash winnings would suffice.
I haven't seen anything in the IRS site to show that these type of winnings are taxed at 80%. You mean that a US citizen's Vegas or lottery winnings are taxed at 80%?
(I'm not a tax guy but this makes sense to me. Please someone correct me if I got it wrong.)
