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About Oprah's car give away

by Del McMullen / September 22, 2004 9:12 AM PDT

The cars were not exactly FREE. More like 75% Off.

Even a mouse knows there is no such thing as a free lunch.

Uh oh. Some things really are too good to be true. One of them may be the free Pontiac G6 Oprah Winfrey and General Motors gave to 276 members of "The Oprah Winfrey Show" audience on September 13. Turns out, the car isn't totally free after all.

Even though Pontiac is paying the state sales tax and licensing fees, the recipients will have to pay thousands of dollars in state and federal income taxes, reports The Chicago Sun-Times. And some of them are quite surprised--and downright worried by the tax sticker shock that could cost each winner $7,125 or more. By law, the winners will have to add the value of the "free" car--$28,500--to their income. That could push them into a higher income tax bracket. Most of the winners will likely have to pay about 25 percent or more of the car's value in taxes, which adds up to $7,125. And that's not all. The winners will also have to pay state income tax on the vehicle.

"It's not really a free car, it's more of a 75 percent off car," winner Susan Nelson told Sun-Times reporter Lucio Guerrero. "Of course, that's still not such a bad deal." Winner William Toebe, a farmer in Green Bay, Wisconsin, told the paper, "As I was standing up there, the responsible portion of me said, 'This is very nice, but where am I going to get the money for the taxes?'" He's even thinking of getting rid of the car for just this reason.

Even though it was implied that the winners walked out of the studio and drove away in their new cars that day, they haven't yet received the vehicles. The automobiles will actually be delivered to a dealer near each winner's home, reports the Sun-Times. Pickup will be between October 1 and February 28. So the good news is that the winners have time to figure out how they are going to pay the taxes and could even delay that bill until April 2006 if they get the car after December 31.

If you don't vote on Nov 2.....
,,,,you can't complain for 4 years
So vote, and vote smart

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I didn't see it. Did Oprah make it clear that GM was paying
by Kiddpeat / September 22, 2004 9:18 AM PDT

for the cars, or did it sound like it was her gift?

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GM is footing the bill for the cars
by Steven Haninger / September 22, 2004 9:52 AM PDT

It's a new car promo op for GM. Good will, Oprah, and a few mil is better than what the ad guys could ever do on the tube.

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Re: I didn't see it. Did Oprah make it clear that GM was pay
by John Robie / September 23, 2004 1:36 AM PDT

Good point. I didn't see all the program, but wife did and she said the impression she got during the program is that it was a GIFT from OPRAH. She later, and so did I, over the news that GM was donating the cars.

Have seen also on Jay Leno and Letterman's programs of mention about Oprah's car give away without saying anything about GM's donation.

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Sounds like a liberal. Give your money away.
by Kiddpeat / September 23, 2004 3:55 AM PDT

Thank you Oprah! Devil

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Re: About Oprah's car give away
by Josh K / September 22, 2004 11:11 PM PDT

I wondered about the taxes as soon as I heard the story. I'm sure you've heard the same stories I have about game show winners who had to sell their prizes just so they could pay the taxes.

In all fairness, the members of the studio audience should have been advised of this before they left the studio, so they'd have the opportunity to decline the gift if they didn't feel they could pay the taxes on it.

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Re: About Oprah's car give away
by Dan McC / September 23, 2004 12:18 AM PDT

Bought a lottery ticket
just to change my luck.
Thought I wouldn't mind losing
it only cost a buck.
I won an electric guitar
and a baritone sax,
But I had to pawn my clothes
to pay off the tax.
It seems I always lose.
You got to suffer
if you wanna sing the blues.

You can sing a happy song if you're glad,
Or a protest song if you're mad,
But if you wanna sing the blues
Then, boy, you better learn how to lose.

-David Bromberg
"You got to suffer if you wanna sing the blues"

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Re: About Oprah's car give away
by Dave Konkel [Moderator] / September 23, 2004 1:50 PM PDT

Hi, Josh.

>>In all fairness, the members of the studio audience should have been advised of this before they left the studio, so they'd have the opportunity to decline the gift if they didn't feel they could pay the taxes on it.<<
Nonsense -- I have a good online friend (in Buffalo) who was fortunate enough to win a ca. $30,000 SUV in a raffle. They sold the SUV back to the dealer, nd used the proceeds to pay the taxes and put down a down payment on their first house.

-- Dave K, Speakeasy Moderator
click here to email semods4@yahoo.com

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

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Re: About Oprah's car give away
by Diana Forum moderator / September 23, 2004 12:53 AM PDT
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Re: About Oprah's car give away
by John Robie / September 23, 2004 1:39 AM PDT

Yep, like a personal loan from the Credit Union, and use the car as collateral.

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Re: About Oprah's car give away
by MarciaB / September 23, 2004 1:15 AM PDT

I don't know how it all worked for this deal with Oprah. It sounds as if the people involved were given the opportunity to come to the taping of the show (likely paid for in all regard) without really knowing what it was all about.

They found out during the taping that they are being offered something they have stated to Oprah (or through a friend, etc.) that they need for an extremely discounted price. They then are told that in order to actually have this prize they must be willing to pay something themselves.

I see nothing wrong with that as long as they were informed at some point what the rules were that applied to this "gift." I, myself, have recently experienced this with the Microsoft Sweepstakes that I won. I was informed from the very beginning that if I accepted the vacation package and went to Las Vegas I would be responsible for the taxes (appx. $8k). There was never any time after my first notice of being chosen as the winner of this that I didn't know that. I read everything several times that came with the notices received.

If you look at how many people were given an opportunity to get one of these vehicles, there seem to be very few of them that are disappointed that they did not get the "full meal deal" in regard to some responsibility for the gift. My understanding, at least in this case, is that they could sell the vehicle before it ever leaves the lot, and then purchase something that may be much less in regard to taxes, etc. If nothing else, they would have more than they did to begin with - my thoughts on it, anyway.



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Re: About Oprah's car give away
by John Robie / September 23, 2004 1:31 AM PDT

Gee Marcia, am I reading this right. Your free Las Vegas Sweepstakes vacation is going to cost you $8000 (thousand $'s) in taxes alone? (Not counting some meals and lots of tips)

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This is what it said
by MarciaB / September 23, 2004 1:46 AM PDT

The prize I won has an "Approximate Retail Value of $8,000." When I received the "confirmation" notice, this is what was stated:

"Please be advised that Marden-Kane will mail you a Miscellaneous Income Form (1099) at the end of the year. You will be responsible for any income tax associated with the receipt of this prize. Please keep a copy of this form with your tax files. The IRS will be provided with a duplicate copy."

It is no different than if you were to win a lottery or a "jackpot" at a casino. I had the opportunity to state that I would not accept the prize. My total income is already below what is considered "poverty level" as it is. This $8k will not create any undue hardship for me. If it did, I would have had to decline the prize.

I am only assuming that the Oprah car-thing is similar in regard to the winner's responsibility in some ways - you get something you need (in my case, a vacation!!) for a price far below what it would normally cost. If you are able to find a way to make it work for you, that is wonderful - if not.....well, I guess it was a great opportunity that just didn't pan out. The old saying of "don't look a gift horse in the mouth" I guess Happy



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Re: This is what it said
by John Robie / September 23, 2004 2:28 AM PDT
In reply to: This is what it said

Oh, Ok, instead of $8,000 tax it is the total package is worth $8,000 retail and that is what is being reported to the IRS. Yes, I think it is worth taking for anyone and it is like the Oprah car giveaway. The $8,000 will have to be shown as additional income, kinda like just regular wages except reporting on a different line of the IRS tax form. Many people would be paying a little more in overall taxes, it depends on income level.

It's different than winning at a Casino...see my post to Dell below.

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Re: About Oprah's car give away
by John Robie / September 23, 2004 2:18 AM PDT

Well, thought everyone knew about paying state/federal taxes on gifts/winning, but guess there are some of the later generation not informed. In any event you usually come out ahead regardless.

Like winnings on gambling in Vegas or states that have legal casinos. We make a couple trips per year gambling in Vegas, Louisiana, or Mississippi, and learned some years back about winning/losing. The IRS indicates you can deduct as much as you lose, but not deduct any amount won over what you lost. You must do the itemized filing with the IRS if trying to deduct as much as won. Most average people do better by taking the standard deduction with the IRS so can't deduct their losses and must show their winning as income. Better keep good records and be able to explain your losses if trying to balance off you winnings. For instance, you took $4000 out of bank savings on a certain date to go to Vegas and came back home and deposited $7000 back into savings. Course you can think...well I spent so much on transportation, meals, tips, entertainment etc.. Ah!..now what did I tell IRS on my winning/losses.

Last time I was in Vegas the casinos will report any of your winnings of $1200 or more at a time to the IRS. You may notice some jackpots are shown as $1199.

Some time back in Tunica, Mississippi, when the wife 1st won around a $2500 jackpot.. course they gave her a slip showing how much was being reported to the IRS, BUT went ahead and actually deducted the Mississippi state tax from her cash winnings. OK, we had to drive some distance to another area at a town library to get the state tax forum to file at the end of the year. Well, for out of staters they make it so difficult in the forms to get a refund that most people would have to get a tax expert or CPA to fill out. You also have to give them all kinds of info that is on your federal IRS forms. Well we went ahead and filed and got a partial amount back. The last time around that the wife won in Mississippi, we quickly calculated and just went ahead and let Mississippi keep all the tax as it is just too time consuming and we don't want to pay for someone to figure. Ah! Mississipp counts on people like me to ignore filing.

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They must have changed...
by J. Vega / September 23, 2004 10:37 AM PDT

The rules about casino winnings/losses must have changed, it's been a long time for me. AIR, it used to be that you can deduct losses only up to the amount of winnings. Example: If I lose $800 trying to hit a jackpot and then hit a $1,000 jackpot, I could have deducted that $800 loss from the $1,000 jackpot. In other words, pay taxes on the net gain of the gambling. However, if I just went into the casino, put $1,000 on the pass line of the craps table and lost the bet, I'd be out of luck if I tried deducting that from my yearly taxes.

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Re: They must have changed...
by John Robie / September 23, 2004 1:45 PM PDT

You are correct J, pay taxes on the net gain, and both of your examples are correct. Keep in mind that if you turned around and won $1000 on the crap pass line you can off set that loss. Like you say,
"you can deduct losses only up to the amount of winnings". Guess I didn't make it clear enough, however keep in mind you cannot deduct any losses for gambling unless you itemize your deductions with the IRS.

For a lot of the people I know, and that includes me, it is better to take the standard deduction that IRS allows when filing normal taxes. In my case, my house, vehicles, and nothing else has no mortgage, therefore I pay no interest, have no other type of legitimate deductions, so have nothing to deduct except the gambling losses. It's best to figure it both ways, but importantly be careful on the fudging of gambling losses and be prepared to prove those loses to the satisfaction of the IRS when called in under oath...etc.. The IRS can check all your accounts and see what you spent/withdrawn/deposited unless you have a coffee can buried in the garden. They can also check credit cards, figure your expenses pretty close on a gambling trip, comps, etc. Note what you have bought new and when, etc..
Now-a-days, with gambling slot cards, that you use to get comps, the casinos can accurately show and even print out your gambling win/losses.

Say I won $6000 at the casino that they reported to the IRS, and I decide to itemize with the IRS tax forms. Gee I can only claim a maximum of $6000 in gambling losses (if I think I can get by with it),and can't itemize other legitimate deduction. So the $6000 is subtracted from my Gross income. But, I don't get to subtract a Standard Deduction.

Ah! look-ie here good old uncle will let me take a $10,000 standard deduction if I don't itemize, and I have to go ahead and claim the $6000 winning to my income as uncle will not let me deduct for gambling losses on a standard deduction. So, I'm $4000 ahead in subtracting from the Gross.

Other things... Example for instance supposedly I took $2000 out of savings, went to Vegas, never used ATM, wrote no checks or used no credit card, no tab with casino, and deposited $3000 in savings when came back home. Never won high enough to have casino report anything to IRS and didn't use slot cards. Come tax time, reported to IRS that you won $1000. Ah, IRS decides a audit, says no way could you spend 5 days in Vegas and not spend something out of that $2000 you took. You had to win more than $1000 to come back with $3000.

I believe I have seen some shady characters that may be laundering money through gambling at the casinos. If I can spot them, I'm sure others in the business can.

Ok, the other point I was making was about the casinos reporting to the IRS winnings $1200 or over. They insist on identification and you better come up with a valid SSN or they subtract the IRS cash. Now suppose you hit several winning black jack hands worth several hundred dollars at a sitting, make several sittings a day, play some craps, win several hundred dollars, play some video poker, win several $200 jackpots and rake up say $2 - $3 thousand dollars a day, but it's not reported to the IRS by the casino, and here old John brought $2000 to Vegas and starting to leave has $7000 in his pocket. Even with comps for rooms/meals/limos/drinks it is hard to spend more than a few hundred dollars just for tips -- or can you. So old John better tell IRS he won about $7500...eh..even tho the Casinos didn't report anything to the IRS. Now on his taxes he may be able to say he lost $7500, but he has to keep in mind that $10,000 standard deduction is a better deal.

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Of course, John...
by J. Vega / September 23, 2004 2:36 PM PDT

Of course, John, nobody keeps track of your chips at a table game. The IRS assumes that you will be honest.

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I have been called 'Honest John'
by John Robie / September 23, 2004 3:19 PM PDT
In reply to: Of course, John...

by a couple people long ago ;-).
Gee, just remembering old Al could bootleg, do Tammany Hall, murder, etc..but taxes got him and in the end a prostitute.

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Re: About Oprah's car give away
by C1ay / September 23, 2004 10:38 PM PDT

There's nothing new or fishy here. Uncle Sam has always considered gifts to be part of one's income. The same applies to lottery and game show winners.

These cars were technically gifts from Oprah so they are eligible for the federal gift tax.

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