Question

Dan loves game shows, He has been a guest on many game shows including Ellen. On the last game show, The Price Is Right, he was invited to participate. As a result, he won a new car valued at $48,000. He questions whether this prize is taxable or is it a non-taxable gift. He is concerned about the value of the car and the associated tax that he may have to pay. Dan emailed you, his tax accountant. He wants you to tell him if he is required to report the car as income, and if he is required to report it as income, how much would be reported?

Answer 1

As per the above question Dan won a new car valued at $48000 which is also the part of the income of Dan under the income tax head (Income from other sources) thats why Dan have to tell his accountants so accountant will consider this winning price while calculating the income of Dan for taxation purposes.

on the other hand the distributors of price will also collect the tax amount before he handover the car to Dan as its a gift in kind not in cash so dan firstly have to pay the tax amount on that car to the organisers of the particular game and the he is able to take that car with him.