To take the free Olympics trip or not
 

I won a 5 day 4 night trip to the Olympics for two that was offered by one of the Olympics sponsors.

It comes with coach flights, hotel, food etc. but because of the high face value price of some tickets the sponsor has, it has a value of $35,000, which means something like $10,000 in taxes.

There is no cash alternative and because the sponsor wants pictures, it's unlikely I'd be able to sell any tickets.

There is no cash involved.

I've checked with the IRS. It WOULD in fact be considered income.

Finally income averaging is no longer involved and I'm not a big Olympics fan.

What would you do? I'm leaning towards rejecting the prize.

If it's the taxable amount that's of concern, I have read accounts of travel prize winners researching the accurate market value of the travel items. Based on that research, they have negotiated with sponsors for a 1099 form with a lower taxable value.

May not work with all sponsors, but may it be a possibility here?

Did you win UA's Olympic sweepstakes?

It makes me really angry that they wouldn't list that on the outset before people enter the contest. $10k in tax is a lot of money for most people and you could probably have just gone to London and picked sports you wanted to see for less and maybe used a GPU to enjoy a more comfortable trip.

I agree with you - if sport isn't your thing, reject the prize and spend $10k on something you actually want to do. Congrats on winning, but tax consequence trumps the whole experience IMO.

It wasn't from United. But I don't want to identify who it came from.

I have won similar prizes of travel. I cost out the exact flights exact hotels and price the tickets at face value--what they sold for-- and then report that on return despite the 1099. I get audited sometimes but have been able to make the case for the lesser amount with all of the printouts and have won three times. As long asyou have documentation out the wazoo you should be ok. No promises but contact a CPA and ask him

Perhaps you can donate the prize or sell it? If you can sell it for a low amount, that is the value of it!

Is it transferable?
 

If so put on CC and get something for it.
First someone may have no problem with the taxes, or second they may live in Canada or Mexico where winnings aren't taxable.

My guess is from what's written here, the OP is US Citizen. Second, I imagine the contest rules specify US entries only meaning the winner would have to be US tax-paying resident. Third, AFAIK, you can't pay tax liabilities using a CC.

I am a U.S. citizen. I don't believe I can gift it without paying taxes if I can gift it at all (I don't believe I can)

I'm going to talk to them about valuations, but the problem isn't the air fare and hotel valuations which as someone suggested you can figure at real rate as long as you can defend it.

It's the rest including

--sponsor tickets to events
--transportation back and forth to games
--food

Some of the events have tickets with high prices for the top tickets:

Top open ceremonies tickets are £2,012 each.
Top diving medal ceremonies tickets are £450 each
The equestrian jumping medals top tickets are £275 each

Some others are 325 pounds.

That for example would mean If I took a friend to the diving medal ceremonies, I'd owe about $450 in taxes.

I'm still trying to figure out how this could possibly add to $35,000 given the flights are less than $2,000 a person and hotel is $700 a night for four nights. But I'm being told at least initially to expect the $35,000 tax form

If it makes no economic sense to you, reject it. What kind of prize gets you such liability? I would reject it too.

My understanding is that a lot of the events sold out at list prices. That being the case, the value of the prize is certainly the list price, even if they may not be worth that to you and/or if you would never have paid that much for them. I know you already recognized this, but for others' benefit, this is totally different than, say, the list price for premium-cabin airfare, where it can be argued that few people actually pay the list price so that actual value is much less.

HGTV's Dream Home giveaway learned this lesson, when the first couple of winners of the Dream Home couldn't afford to keep the home, because of taxes. They never lived in the home and ended up selling it.

Now, HGTV includes a lump sum of cash as well as the prizes, with the thought being that the case covers most of the taxes, allowing the winner of the contest to actually keep the home.

The sponsors of the Olympic contest should have anticipated this issue, and included $10 or $15 thousands dollars cash in the winnings as well.

Should I pay $10K to see something that doesn't excite me? Seems rather obvious to me.

Personally, I would think hard about it. I had a great time at the Atlanta Olympics, but a family member on the US wrestling team had rooms for us to use, the men's basketball final was only about $250, and we scalped tix to volleyball, team handball, and other minor sports, and had a great time with the mufti-cultural experience.

Opening/closing ceremonies, etc., wouldn't excite me, especially at $700 in taxes. If I didn't have the option to pick and choose, even me as a sport/Olympics fan would have a tough time accepting it.

The first use of CC was for Coupon Connection.

Looks like your use of CC is Credit Card.

And yes, you can pay taxes using a credit card. It's not particularly economically good, since the vendor charges a surcharge (over and above the tax amount) to do so.

Did you enter this contest? If so, why? I have gone to several Summer Olympics, and will be going to London (using miles for flights and hotel). I think it is one of the most fun times imaginable, but to each his or her own. I bought tickets for two for a number of great events, inluding some top-price ones, though not the opening ceremonies. The total cost was well below the $10,000 that you are being told represents the taxable amount. If they are a sponsor, they have plenty of tickets. Why don't you turn some down, ask for lower category seats for some, etc.? There has been some talk online that high priced seats have lower row numbers, but may not be in as good a part of the venue as some lower-priced seats.