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abonuses
January 16th, 2008, 10:44pm
Okay. I won something big. (well about $3000). I want to accept the prize and use fair market value because ARV for 1099 is very very inflated in my opinion. Have found this item for $1100 less. Problem DH and our tax professional say that we must use 1099 amount.

Can someone tell me the IRS publication number which states that we can use fair market value? I know that this issue is addressed often in the forums. If I can just show DH the citing from the IRS code, he will agree that I should accept. Thanks Angela

Oh, I will tell you guys after affy is submitted and accepted what prize is. don't want to jinx it.

Taminar
January 16th, 2008, 10:57pm
But how do you know what the 1099 amount is if you haven't even sent back your affy? The company may give you an honest assessment so it won't be a problem.
If you are going to use Fair Market Value, be sure to save copies of ads, printouts of webpages -- any kind of documentation of the lower value, so you can prove it if the IRS asks.

Rookiesmom
January 16th, 2008, 11:00pm
I don't know where it is in the tax code but when I won a 46' TV in a National grand prize for Lowes in 2006 I used the price I found on the web for the TV and reported that price to the IRS. The fair market value is the price someone would be willing to pay for an item. In this case the pricing I found for my TV was about 600 dollars less than what was reported on the 1099. I still have not had any problems from the way I reported it and I kept all the dated documentation...just in case.

gabyzee
January 16th, 2008, 11:21pm
The fair market value is the price someone would be willing to pay for an item. In this case the pricing I found for my TV was about 600 dollars less than what was reported on the 1099. I still have not had any problems from the way I reported it and I kept all the dated documentation...just in case.

What she said! :yesyes:

Embee
January 16th, 2008, 11:25pm
I've read the rule in the tax law. You can go to the IRS website and do a search; but I'm still not sure how you have a 1099 on something you haven't received or still considered "potential" for...

Congrats whatever it is!

Psyche34
January 16th, 2008, 11:28pm
This might be helpful to you. It's kind a step by step info thing, pretty good.
http://contests.about.com/od/taxesfinances/ht/FMVvsARV.htm

gcole1663
January 16th, 2008, 11:53pm
I recall when I used turbotax and put in the value of the 1099. Turbo tax came right back asking me what the fair market value was and that is what they put in another place on the form and that is what it used to determine my taxes. Like others said just keep proof that you can show the IRS if they audit you.

tiglesia
January 17th, 2008, 12:02am
I contacted the sponsor directly and asked for an ammended 1099, I sent them 3 prices for the item all were significantly lower than the original ARV, they went somewhere in the middle of the prices I sent and sent me an ammended 1099 well before tax time. I always say in any type of situation, contact the sponsors first directly, they usually try to make things right.

Let us know how it turns out, and importantly, CONGRATS!

tawnjun
January 17th, 2008, 12:06am
I'm just guessing, but I believe the OP is stating for possible future use? I don't think OP has got 1099 in hand. Just asking for advice? Correct me if I'm wrong OP.

judyv01510
January 17th, 2008, 12:14am
This might be helpful to you. It's kind a step by step info thing, pretty good.
http://contests.about.com/od/taxesfinances/ht/FMVvsARV.htm

I recall when I used turbotax and put in the value of the 1099. Turbo tax came right back asking me what the fair market value was and that is what they put in another place on the form and that is what it used to determine my taxes. Like others said just keep proof that you can show the IRS if they audit you.

Absolutely true My family has won large. over 1/2 million. in one prize and use FMV, And prize worth 500 and used FMv. We have won trips and use FMV.

Ps I do not enter sweeps that do not have prizes that are concrete where FMV is available.
Meet the celebrity is an example. They can say it is worth $10000 and there is no way to prove otherwise.

PPS Meeting a celebrity, other the GOD, has no value to me anyway.

PPPS I would pay everything I own to meet GOD.

Sorry got off the track a little bored tonight and that makes me wordy.

Alexandrea
January 17th, 2008, 12:23am
Tagging this because I got a trip that was at least 5k over the ARV - I have all the documentation (except for one little part of it that nobody would give me a price for) but we go to do our taxes with a new accountant soon and I worry she will say the same thing and refuse to put in the fair market value. Thanks for the walkthru link!

suelee000
January 17th, 2008, 12:52am
...Subject to certain exceptions, the cash value of prizes or awards won in a drawing, quiz show program, beauty contest, or other event, must be included on the tax return as taxable income.

Taxpayers must also report the fair market value of merchandise or products won as a prize or award, as taxable income.

For example, both a $500 cash prize and the fair market value of a new range won in a baking contest must be reported as other income on Form 1040, Line 21.



http://www.irs.gov/newsroom/article/0,,id=175963,00.html (http://www.irs.gov/newsroom/article/0,,id=175963,00.html)

IRA Publicatoin 525 (http://www.irs.gov/publications/p525/ar02.html#d0e8835)


Prizes and awardsB]
Prizes and awards. If you win a prize in a lucky number drawing, television or radio quiz program, beauty contest, or other event, you must include it in your income. For example, if you win a $50 prize in a photography contest, you must report this income on Form 1040, line 21. If you refuse to accept a prize, do not include its value in your income.

Prizes and awards in goods or services must be included in your income at their[B] fair market value.

RockysJewel
January 17th, 2008, 1:07am
They are both wrong. I have won many a thing and found things cheaper and used that as my tax base. Most sweepers do and if you check the IRS website it will show the rules for FMV


Okay. I won something big. (well about $3000). I want to accept the prize and use fair market value because ARV for 1099 is very very inflated in my opinion. Have found this item for $1100 less. Problem DH and our tax professional say that we must use 1099 amount.

Can someone tell me the IRS publication number which states that we can use fair market value? I know that this issue is addressed often in the forums. If I can just show DH the citing from the IRS code, he will agree that I should accept. Thanks Angela

Oh, I will tell you guys after affy is submitted and accepted what prize is. don't want to jinx it.

RockysJewel
January 17th, 2008, 1:09am
http://www.irs.gov/newsroom/article/0,,id=175963,00.html (http://www.irs.gov/newsroom/article/0,,id=175963,00.html)

IRA Publicatoin 525 (http://www.irs.gov/publications/p525/ar02.html#d0e8835)

jjampm
January 17th, 2008, 1:39am
Quoted from IRS document ( http://www.irs.gov/newsroom/article/0,,id=175963,00.html ):

Prizes and awards

Subject to certain exceptions, the cash value of prizes or awards won in a drawing, quiz show program, beauty contest, or other event, must be included on the tax return as taxable income.

Taxpayers must also report the fair market value of merchandise or products won as a prize or award, as taxable income.

For example, both a $500 cash prize and the fair market value of a new range won in a baking contest must be reported as other income on Form 1040, Line 21.

So, yeah fair market value. If it were me, I would do as the poster above and have the sponsor change the 1099 to the correct, current FMV, since that's how they are required to report it on the 1099. They are subject to fines if they don't fill it out correctly.

May be time for a new tax professional? :yesyes:

yadgirl
January 17th, 2008, 1:55am
The best way for you to go about it is to call the sponsor and ask them to send you an adjusted ARV. If they will do that, it will solve your problem.

If not, you need to claim the value that is listed in the 1099. Or as close to it as possible.

suelee000
January 17th, 2008, 9:04am
If you are serious about sweeping, you need someone who understands the sweeping rules.

bjdotson
January 17th, 2008, 9:13am
If you are serious about sweeping, you need someone who understands the sweeping rules.

Right, what she said

pepper4716
January 17th, 2008, 9:18am
I won something from an online company that never sells anything for the MSRP. It's always 20% off. So if they send a 1099 with the MSRP instead of the price that would have sold the item for which would you use?

stan1162
January 17th, 2008, 10:43am
I won a lawn "tractor" that had an ARV of $4000.00. I loved it, unfortunately, I did not fit through my iron gate to the back yard!!!

I sold it brand new, for less than $4000.00, and the copy of the sales contract with the people as documentation for the IRS. That was the proof of Fair Market Value, "what a person is willing to pay". How much more willing than sales contract is there!

No problem

honeymom
January 17th, 2008, 10:53am
My CPA was fine with FMV when I had a similar issue with a tv. Plus, the affidavit did come in a little lower than quoted as well.

As to prizes with celebrities, most celebrities have booking engagement fees ranging from $5000 up. So, chances are that is why celeb prizes are quoted so high. I usually skip those, too. I can't imagine what celebrity I'd really want to spend time with anyway.

janess
January 17th, 2008, 10:53am
OP - I would look into getting a new tax professional, because yours should know the tax laws! Thats what those books with all the ammendments are for :smile5:

tomfarr
January 17th, 2008, 11:03am
Although the 1099 and you're income agree on the front end of the form. You deduct for FMV at the back end. Explanation and documentation are all that you need. I don't worry about the IRS, that is what I pay a CPA for.

abonuses
January 17th, 2008, 11:25am
I have the affy and it states that the ARV is $2699.00; I won in early JanuaRY (2008) so I am expecting the 1099 next year at this time to state this amount. I will contact the sponsor (had not thought of that) and ask that they adjust 1099 to reflect the fair market value.

Thanks for the IRS information. None of this will play out until this time next year but I want to keep my documentation. CPA is an old friend of my DH and except for us, I think that most of his customers are businesses.

I went through an IRS audit about 10 years ago and it was awful. Everything that I had checked out and I got a refund but it was intimidating.

Yes, I love sweeping so this is something that we need to get settled because maybe I will win something else (other than cookies) one day.

Thanks again. this helps a lot.