I won 2 roundtrip First Class flights JFK-Shanghai on China Eastern. How can I sell?
Nov 22, 2014, 12:42 pm
#46
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Sorry but incorrect and I speak from experience. You will get a 1099 and have to add it as misc income on your 1040. You can ask the airline to reflect a value less then full fare.
Nov 22, 2014, 2:27 pm
#47
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engineers at the IRS?? 
but lets put all that aside, you guys realize he DOES pay taxes amounting to $505 to use these tix. why would he have to pay tax on the backend as well, that'd be double taxation.
I dont think so. unless its straight cash (not even cash equivalents) that'd make no sense. the 'value' is arbitrary, and I'd say cant be quantified for income tax purposes, much like airline miles or award tickets.
like I said, this isnt a car or a physical object. its not a tangible asset. its a piece of paper and not even a check -- thus not income.
does a promo == gambling? nope. its akin to a bonus and/or a gift, which are non-taxable
another example: many companies at Christmas time either give out bonuses or hold Secret Santas. do you file taxes on those? do you get a 1099 for your Xmas bonus (paid in the form of a GC so not cash?) nope, never, atleast not me. do you file taxes for anything you rcvd as part of Secret Santa, say it was something fancy like a weekend getaway? I've never known anyone to file taxes for that.
but lets put all that aside, you guys realize he DOES pay taxes amounting to $505 to use these tix. why would he have to pay tax on the backend as well, that'd be double taxation.
I dont think so. unless its straight cash (not even cash equivalents) that'd make no sense. the 'value' is arbitrary, and I'd say cant be quantified for income tax purposes, much like airline miles or award tickets.
like I said, this isnt a car or a physical object. its not a tangible asset. its a piece of paper and not even a check -- thus not income.
does a promo == gambling? nope. its akin to a bonus and/or a gift, which are non-taxable
another example: many companies at Christmas time either give out bonuses or hold Secret Santas. do you file taxes on those? do you get a 1099 for your Xmas bonus (paid in the form of a GC so not cash?) nope, never, atleast not me. do you file taxes for anything you rcvd as part of Secret Santa, say it was something fancy like a weekend getaway? I've never known anyone to file taxes for that.
Computer engineers, software engineers, facilities engineers (aka janitors)
but lets put all that aside, you guys realize he DOES pay taxes amounting to $505 to use these tix. why would he have to pay tax on the backend as well, that'd be double taxation.
I dont think so. unless its straight cash (not even cash equivalents) that'd make no sense. the 'value' is arbitrary, and I'd say cant be quantified for income tax purposes, much like airline miles or award tickets.
like I said, this isnt a car or a physical object. its not a tangible asset. its a piece of paper and not even a check -- thus not income.
like I said, this isnt a car or a physical object. its not a tangible asset. its a piece of paper and not even a check -- thus not income.
does a promo == gambling? nope. its akin to a bonus and/or a gift, which are non-taxable
another example: many companies at Christmas time either give out bonuses or hold Secret Santas. do you file taxes on those? do you get a 1099 for your Xmas bonus (paid in the form of a GC so not cash?) nope, never, atleast not me. do you file taxes for anything you rcvd as part of Secret Santa, say it was something fancy like a weekend getaway? I've never known anyone to file taxes for that.
Nov 22, 2014, 2:52 pm
#48
Join Date: Jan 2013
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chgoeditor is correct. Don't take tax advice from FTRox87 or for that matter, anyone else on this board, me included. It is worth what you paid for it and you cannot rely on it.
In addition to the engineers mentioned by chgoeditor, the IRS employs petroleum engineers, mechanical engineers, and many other specialists not ordinarily thought of working at a revenue agency. The industry specialists help the examination agents and IRS lawyers with technical issues whose factual determination may affect tax consequences. They are the government's in house experts. Some industry specialists are engineers. By way of a simple example, a petroleum engineer may assist in the audit of an estate tax return where the value of an oil well is the issue.
And 84fiero, nice link to the Forbes article by Robert Wood. Until I re-read it just now, I'd forgotten about the controversy over the Olympic prizes. As usual, Mr. Wood is spot on.
The OP needs to go see a CPA or a tax attorney with expertise in this area, and PAY them for the advice.
In addition to the engineers mentioned by chgoeditor, the IRS employs petroleum engineers, mechanical engineers, and many other specialists not ordinarily thought of working at a revenue agency. The industry specialists help the examination agents and IRS lawyers with technical issues whose factual determination may affect tax consequences. They are the government's in house experts. Some industry specialists are engineers. By way of a simple example, a petroleum engineer may assist in the audit of an estate tax return where the value of an oil well is the issue.
And 84fiero, nice link to the Forbes article by Robert Wood. Until I re-read it just now, I'd forgotten about the controversy over the Olympic prizes. As usual, Mr. Wood is spot on.
The OP needs to go see a CPA or a tax attorney with expertise in this area, and PAY them for the advice.
Nov 22, 2014, 8:20 pm
#49
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OP, please don't take tax advice from this guy. The number of factual inaccuracies in his posts are astonishing.
Computer engineers, software engineers, facilities engineers (aka janitors)
If you think that two different taxes being applied = double taxation, you might be shocked to learn that you're being doubly taxed on a zillion things, from sales taxes to gas taxes to property taxes.
You don't understand the definition of "tangible asset" in this context.
In what jurisdiction in the US are bonuses and gifts not taxible? While the gift tax doesn't kick in until you've given a five-figure gift, the money is in fact taxable. As is a bonus -- regardless of the form in which it arrives.
Now you've just admitted to tax fraud. (And remember, ignorance of the law is not a valid defense.)
Computer engineers, software engineers, facilities engineers (aka janitors)
If you think that two different taxes being applied = double taxation, you might be shocked to learn that you're being doubly taxed on a zillion things, from sales taxes to gas taxes to property taxes.
You don't understand the definition of "tangible asset" in this context.
In what jurisdiction in the US are bonuses and gifts not taxible? While the gift tax doesn't kick in until you've given a five-figure gift, the money is in fact taxable. As is a bonus -- regardless of the form in which it arrives.
Now you've just admitted to tax fraud. (And remember, ignorance of the law is not a valid defense.)
To be fair, he is correct that a bonus a company gives its employees won't typically be on a 1099... It will be on your W-2.
Nov 24, 2014, 8:43 am
#50
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[edited by Moderator.]
Tax is on the Fair Market Value of the winnings. (Yes, the 1099 is probably for full retail; but if the winner gets actual selling prices from, e.g., Amazon he can use that value instead. The IRS might demand an explanation.)
Last edited by Ocn Vw 1K; Nov 24, 2014 at 9:33 am Reason: To avoid unduly personalized text.
Nov 24, 2014, 8:55 am
#51
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I once had a boss who bought everyone in the department boxes of very nice chocolates for Christmas. After he had handed them out, payroll told them that the staff would be liable for tax on them - he ended up handing over cash to cover the tax liabilities (and the liabilities on the cash as well). No good deed and all that!
Nov 24, 2014, 9:36 am
#52
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Moderator note.
This thread is getting farther and farther away from the topic of dealing with the winning of airline tickets and choices of how to dispose of that prize. It's getting increasingly personal and narrow in discussing a whole range of tax issues beyond the specific topic.
Let's stay on the topic please and discuss the topic, not members. Thanks. Ocn Vw 1K, Moderator.
Let's stay on the topic please and discuss the topic, not members. Thanks. Ocn Vw 1K, Moderator.
Nov 24, 2014, 12:35 pm
#53
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Back to the OP...thinking more about *how* this all went down.
OP...how exactly did you enter the contest? Were you walking through Rockefeller Center and happened upon a live drawing? If they have no information about you, that suggests it wasn't online, or inflight, or connected to an FFP, or anything more sophisticated than perhaps you writing your first name on a piece of paper to drop into a fishbowl.
If the paper envelope is the only thing connecting you to the prize, then it sure sounds like you could sell it for $6,000 cash and walk away. Assuming the vouchers or codes inside are legit, it sure sounds like your buyer could redeem them without running into a "no transfer" rule. (I guess the CTO agent in Rockefeller Center could say "Wait, that's not the same guy I gave the envelope to...")
The whole thing sounds so low-tech that it's quite possible that China Eastern *won't* 1099 you at all. That they'll code the flight in some internal employee nonrev bucket, collect your $505, print off your itinerary right there in Rockefeller Center, and send you on your way.
My partial concern for you is that the whole thing isn't what it seems. My bigger concern would be for China Eastern, because this sure *sounds* like a sweepstakes run in a rather ad-hoc manner. It sounds like a contest to which *some* New York state regulations would apply, some pertaining to the fairness of the game, some no doubt pertaining to tax collection from grand prize winners.
How many people entered this contest? How many people won?
OP...how exactly did you enter the contest? Were you walking through Rockefeller Center and happened upon a live drawing? If they have no information about you, that suggests it wasn't online, or inflight, or connected to an FFP, or anything more sophisticated than perhaps you writing your first name on a piece of paper to drop into a fishbowl.
If the paper envelope is the only thing connecting you to the prize, then it sure sounds like you could sell it for $6,000 cash and walk away. Assuming the vouchers or codes inside are legit, it sure sounds like your buyer could redeem them without running into a "no transfer" rule. (I guess the CTO agent in Rockefeller Center could say "Wait, that's not the same guy I gave the envelope to...")
The whole thing sounds so low-tech that it's quite possible that China Eastern *won't* 1099 you at all. That they'll code the flight in some internal employee nonrev bucket, collect your $505, print off your itinerary right there in Rockefeller Center, and send you on your way.
My partial concern for you is that the whole thing isn't what it seems. My bigger concern would be for China Eastern, because this sure *sounds* like a sweepstakes run in a rather ad-hoc manner. It sounds like a contest to which *some* New York state regulations would apply, some pertaining to the fairness of the game, some no doubt pertaining to tax collection from grand prize winners.
How many people entered this contest? How many people won?
Nov 27, 2014, 11:26 pm
#54
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Back to the OP...thinking more about *how* this all went down.
OP...how exactly did you enter the contest? Were you walking through Rockefeller Center and happened upon a live drawing? If they have no information about you, that suggests it wasn't online, or inflight, or connected to an FFP, or anything more sophisticated than perhaps you writing your first name on a piece of paper to drop into a fishbowl.
If the paper envelope is the only thing connecting you to the prize, then it sure sounds like you could sell it for $6,000 cash and walk away. Assuming the vouchers or codes inside are legit, it sure sounds like your buyer could redeem them without running into a "no transfer" rule. (I guess the CTO agent in Rockefeller Center could say "Wait, that's not the same guy I gave the envelope to...")
The whole thing sounds so low-tech that it's quite possible that China Eastern *won't* 1099 you at all. That they'll code the flight in some internal employee nonrev bucket, collect your $505, print off your itinerary right there in Rockefeller Center, and send you on your way.
My partial concern for you is that the whole thing isn't what it seems. My bigger concern would be for China Eastern, because this sure *sounds* like a sweepstakes run in a rather ad-hoc manner. It sounds like a contest to which *some* New York state regulations would apply, some pertaining to the fairness of the game, some no doubt pertaining to tax collection from grand prize winners.
How many people entered this contest? How many people won?
OP...how exactly did you enter the contest? Were you walking through Rockefeller Center and happened upon a live drawing? If they have no information about you, that suggests it wasn't online, or inflight, or connected to an FFP, or anything more sophisticated than perhaps you writing your first name on a piece of paper to drop into a fishbowl.
If the paper envelope is the only thing connecting you to the prize, then it sure sounds like you could sell it for $6,000 cash and walk away. Assuming the vouchers or codes inside are legit, it sure sounds like your buyer could redeem them without running into a "no transfer" rule. (I guess the CTO agent in Rockefeller Center could say "Wait, that's not the same guy I gave the envelope to...")
The whole thing sounds so low-tech that it's quite possible that China Eastern *won't* 1099 you at all. That they'll code the flight in some internal employee nonrev bucket, collect your $505, print off your itinerary right there in Rockefeller Center, and send you on your way.
My partial concern for you is that the whole thing isn't what it seems. My bigger concern would be for China Eastern, because this sure *sounds* like a sweepstakes run in a rather ad-hoc manner. It sounds like a contest to which *some* New York state regulations would apply, some pertaining to the fairness of the game, some no doubt pertaining to tax collection from grand prize winners.
How many people entered this contest? How many people won?
As I posted in the original post, this was a promotional event in celebration of the new 777s purchased by China Eastern Airlines. As you walked in, you were handed a nicely printed, heavy cardstock "boarding pass" with a raffle number on it. They gave away 3 economy seats, 3 business class seats, and 1 PAIR of first class seats. And then after they gave me the first class price, which consisted of just an envelope with a voucher inside, they then gave away additional economy and business class tickets. There were probably 20 winners at the event of maximum... 300 people.
Nov 28, 2014, 9:51 am
#58
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Two issues being confused here:
1. OP is referring to taxes and other fees which are imposed on the ticket and are not included in the freebies.
2. In addition, when the tickets are issued, OP will be asked to provide the information required for the carrier to report the gift. Typically he will be asked to complete an IRS Form W9. That, in turn, will generate a 1099 to OP reporting the fair market value of the tickets. In a situation such as this, would likely be whatever a ticket in FC with roughly similar restrictions would cost.
If the tickets are worth $20K, OP's income is increased by $20K, but it is "phantom" as he does not have cash for it. If his federal, state, local & FICA taxes amount to 30%, that will cost him roughly $6K in cash he owes to various taxing authorities.
Many people don't claim high-end prizes or they don't pursue their claim once they figure out what it will cost them. Even though paying only 30% of fair market value can be a bargain, that can still be a lot of money to lay it out.
Businesses which manage these giveaways know all this and it is calculated into the deal.
1. OP is referring to taxes and other fees which are imposed on the ticket and are not included in the freebies.
2. In addition, when the tickets are issued, OP will be asked to provide the information required for the carrier to report the gift. Typically he will be asked to complete an IRS Form W9. That, in turn, will generate a 1099 to OP reporting the fair market value of the tickets. In a situation such as this, would likely be whatever a ticket in FC with roughly similar restrictions would cost.
If the tickets are worth $20K, OP's income is increased by $20K, but it is "phantom" as he does not have cash for it. If his federal, state, local & FICA taxes amount to 30%, that will cost him roughly $6K in cash he owes to various taxing authorities.
Many people don't claim high-end prizes or they don't pursue their claim once they figure out what it will cost them. Even though paying only 30% of fair market value can be a bargain, that can still be a lot of money to lay it out.
Businesses which manage these giveaways know all this and it is calculated into the deal.
Would he have a case to pay taxes on something less than the mythical $40k that very few, if any, people would ever pay for two F tickets on this route?
If there's a revenue passenger sitting in a JFK-PVG F seat as I type this (and that's a big IF), I'd bet a beer that his company likely paid about $6,000 R/T for the seat, coded in revenue J.
There are probably a bunch of ways to ferret out what people really pay to fly F on that route, none of which will lead to $20k per person. The question is, if the airline 1099's you for an amount, can you make a case to counter with a different amount and have the IRS agree.
If there's a revenue passenger sitting in a JFK-PVG F seat as I type this (and that's a big IF), I'd bet a beer that his company likely paid about $6,000 R/T for the seat, coded in revenue J.
There are probably a bunch of ways to ferret out what people really pay to fly F on that route, none of which will lead to $20k per person. The question is, if the airline 1099's you for an amount, can you make a case to counter with a different amount and have the IRS agree.
Dec 1, 2014, 9:21 am
#59
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[QUOTE=HarryLime;23910237]That's $40k for 2 tickets.../QUOTE]
But are you getting true F tix? I would think much lower value consolidator APEX-style fares that will cost less than a third of that.
To some of the tax comments above, do you declare the bottle of Veuve Clicquot you win at the school's bottle tombola?
But are you getting true F tix? I would think much lower value consolidator APEX-style fares that will cost less than a third of that.
To some of the tax comments above, do you declare the bottle of Veuve Clicquot you win at the school's bottle tombola?
Dec 1, 2014, 9:26 am
#60
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