1099-misc for the NHC

[VOL JACK]

Originally Posted by pointman

You can't fault Monmouth for this, this is a fact of life. You won a free trip, airfare and hotel. Anytime anyone wins a prize it is income and taxable. It is one of the certainties of life.

You are obviously not a contest player.

[OTM Al]

Just talked to the wife who has run these tournaments and she says this is completely wrong. The air and hotel is one thing, though her winners never paid tax on these either, but tax on the seat is outrageous and completely wrong. You need to contact Monmouth about this and if they don't respond, write to the NHC people about this.

[pointman]

Originally Posted by VOL JACK

You are obviously not a contest player.

I have no idea what you mean by that.

What I am though is a lawyer, albeit not a tax attorney. But I remember, as almost anyone who went to law school does, the first case they taught us in tax class in our first year. The case was from the early 1900's where an executive got his company to agree to pay his personal taxes in addition to his salary. The Court, I believe the US Supreme Court, held that all the money he was paid was income and he was personally liable to pay not only his taxes on his salary, but also the money his company paid for his taxes.

The bottom line is that I don't believe this is an issue for Monmouth as they do not make up the rules for what is income and what is taxable, Congress does. When you win a prize in general (such as on a game show or a free trip) it is considered taxable income. The issue is more likely one for your accountant, not Monmouth race track.

[VOL JACK]

Originally Posted by pointman

I have no idea what you mean by that.

What I am though is a lawyer, albeit not a tax attorney. But I remember, as almost anyone who went to law school does, the first case they taught us in tax class in our first year. The case was from the early 1900's where an executive got his company to agree to pay his personal taxes in addition to his salary. The Court, I believe the US Supreme Court, held that all the money he was paid was income and he was personally liable to pay not only his taxes on his salary, but also the money his company paid for his taxes.

The bottom line is that I don't believe this is an issue for Monmouth as they do not make up the rules for what is income and what is taxable, Congress does. When you win a prize in general (such as on a game show or a free trip) it is considered taxable income. The issue is more likely one for your accountant, not Monmouth race track.

I meant that, I play in quite a few contests (although not nearly as many as Paul) I have never heard of a track doing this, it is a pretty low blow.
You think anyone would pay $$ to enter their contest had they known this upfront?

[Scav]

Originally Posted by VOL JACK

I meant that, I play in quite a few contests (although not nearly as many as Paul) I have never heard of a track doing this, it is a pretty low blow.
You think anyone would pay $$ to enter their contest had they known this upfront?

So Jack, you only get 1099's if you 'win' flight,room, etc?

[NTamm1215]

This is completely unheard of to me and almost seems like it had to be a mistake. I received 1099s for prize money in 2014 and have in the past. Both of the sites where I qualified last year sent 1099s with travel included. That is the standard procedure.

If Monmouth was touting how they give out more NHC spots than any other racetrack (which they did at the NHC) and they are actually passing through the cost to the players, then that's pretty wretched.

[VOL JACK]

Originally Posted by Scav

So Jack, you only get 1099's if you 'win' flight,room, etc?

yes

[Scav]

Originally Posted by VOL JACK

yes

Wow...There must be some kind of loophole somewhere because in theory, all prize winnings are taxable. Wonder if tourneys keep growing if our lovable friends will go for the money grab regarding it.

(its probably related to same theory that where if you go to the track or casino, you are suppose to report EVERY SINGLE ticket or hand you win as income)

[pointman]

Originally Posted by VOL JACK

I meant that, I play in quite a few contests (although not nearly as many as Paul) I have never heard of a track doing this, it is a pretty low blow.
You think anyone would pay $$ to enter their contest had they known this upfront?

I understand where you are coming from, and I could be wrong, but my instinct tells me that it has nothing to do with Monmouth and everything to do with the IRS.

The IRS definition of income is all money, goods, property and services you receive from any source derived. In basic terms, anything you receive is taxable unless the tax code specifically exempts it. If you go on The Price is Right and you win a car, you have to report the value of the car as income and pay taxes on the value. It is why Richard Hatch, the first winner of Survivor, went to jail for failing to report his winnings.

Again, I am not an expert in the area. But I do know that anything you receive is income unless the tax code specifically says it is exempt or deductible. I am sure there is a CPA around here who knows better, but my instinct says that winning a trip to the NHC is something that you need to discuss with your accountant as there may be tax consequences.

[Scav]

Originally Posted by pointman

I understand where you are coming from, and I could be wrong, but my instinct tells me that it has nothing to do with Monmouth and everything to do with the IRS.

The IRS definition of income is all money, goods, property and services you receive from any source derived. In basic terms, anything you receive is taxable unless the tax code specifically exempts it. If you go on The Price is Right and you win a car, you have to report the value of the car as income and pay taxes on the value. It is why Richard Hatch, the first winner of Survivor, went to jail for failing to report his winnings.

Again, I am not an expert in the area. But I do know that anything you receive is income unless the tax code specifically says it is exempt or deductible. I am sure there is a CPA around here who knows better, but my instinct says that winning a trip to the NHC is something that you need to discuss with your accountant as there may be tax consequences.

What is probably happening is that some of the people might be voluntarily reporting it as gambling income and then just writing it off as gambling loss. I guess if I were to get into a tourney and lose, I would consider that a gambling loss on my taxes. When you do your taxes, there is an area for 'unreported gambling winnings' but I think you can only write off what is reported on W2G's but I could be wrong.

But I agree with you with what you are saying on taxable income.

[OTM Al]

Originally Posted by pointman

I understand where you are coming from, and I could be wrong, but my instinct tells me that it has nothing to do with Monmouth and everything to do with the IRS.

The IRS definition of income is all money, goods, property and services you receive from any source derived. In basic terms, anything you receive is taxable unless the tax code specifically exempts it. If you go on The Price is Right and you win a car, you have to report the value of the car as income and pay taxes on the value. It is why Richard Hatch, the first winner of Survivor, went to jail for failing to report his winnings.

Again, I am not an expert in the area. But I do know that anything you receive is income unless the tax code specifically says it is exempt or deductible. I am sure there is a CPA around here who knows better, but my instinct says that winning a trip to the NHC is something that you need to discuss with your accountant as there may be tax consequences.

The seat cannot be taxable. You cannot buy in, so it has no monetary value. The $3k is the prize money contribution by the satellite contest. If that is taxed, then all taxes have already been paid on all the prize money, so no one cashing at the NHC should have to pay taxes. Does that sound remotely right to anyone? Big no right there.

[pointman]

Originally Posted by OTM Al

The seat cannot be taxable. You cannot buy in, so it has no monetary value. The $3k is the prize money contribution by the satellite contest. If that is taxed, then all taxes have already been paid on all the prize money, so no one cashing at the NHC should have to pay taxes. Does that sound remotely right to anyone? Big no right there.

Like I said, I would check with a CPA. But you might be surprised by what the IRS considers taxable.

It starts with everything you receive.

[Scav]

Originally Posted by OTM Al

The seat cannot be taxable. You cannot buy in, so it has no monetary value. The $3k is the prize money contribution by the satellite contest. If that is taxed, then all taxes have already been paid on all the prize money, so no one cashing at the NHC should have to pay taxes. Does that sound remotely right to anyone? Big no right there.

the loophole. Possibly well done

[Indian Charlie]

Fair and right ain't got nothin to do with it.

[pweizer]

Originally Posted by OTM Al

The seat cannot be taxable. You cannot buy in, so it has no monetary value. The $3k is the prize money contribution by the satellite contest. If that is taxed, then all taxes have already been paid on all the prize money, so no one cashing at the NHC should have to pay taxes. Does that sound remotely right to anyone? Big no right there.

This is my understanding as well. I can't buy a seat. I can't sell a seat. It has no monetary value. It is simply an entry into a "free" contest. The seat itself is only an entry into a contest. There are lots of contests out there with no entry fee and none are taxable to enter.

Obviously, if you cash at the NHC, it is a different story...

Paul

[asudevil]

My only hope is that I have similar challenges to the confusing tax code after tonight's powerball drawing.