Recipients In Oprah's Car Giveaway Face Hefty Taxes

[gauguin57]

I wondered when someone was going to figure this out. The people she chose for the audience were supposedly desperately in need of cars they couldn't afford. So, they can afford $7,000 in taxes? OY! And, as we've learned on numerous news analysis reports recently, this was all about advertising for Pontias!!!

http://www.nbc5.com/news/3750669/detail.html

CHICAGO -- People who got brand new cars in a surprise giveaway on "The Oprah Winfrey Show" are finding out that those vehicles aren't exactly free.

The 276 audience members who received Pontiac G-Sixes on Winfrey's show will need to come up with thousands of dollars to cover taxes on their winnings.

Pontiac agreed to pay most of the local charges, including state sales tax and licensing fees.

But the hitch is that each winner must report the car's $28,500 value as income and pay taxes on it -- which could add up to more than $7,000.

[indie_voter]

1. D'OH!! n/t

[Seabiscuit]

62. Oprah Sucks!!!

(I've never been able to stomach that burbling, swooning, phony-emoting, hypocritical know-it-all attention whore).

[takumi]

2. It's Still Much Better than Having to Pay $28,500 for the Car!

[madmax]

5. lol some people will always look a gift horse (car) in the mouth. n/t

[Occulus]

21. Um- wait. Wait a minute.

I don't want to "win" a car; in fact, I don't want to "win" any piece of property, because of this very thing. If I "won" anything of any real value, I wouldn't be able to accept it, because I can't afford taxes like that.

Of course, this also depends on how/when those taxes have to be paid. Is it before they get the cars, and all in a lump, or can they take posession, and pay the tax off incrementally?

That would make a *small* difference to me. However, I still have never much liked the idea of taxing a person's good luck.

[Bandit]

24. Sell the car for fifteen thousand and pay the seven thousand

You end up pocketing eight thousand dollars. You don't want that??? I think a new car at half price would sell quite easily. Everyone benefits including Uncle Sam.

[madmax]

25. Since Oprah didn't pay for the cars out of her own pocket

maybe she can 'afford' to pay the taxes. ;)

[kysrsoze]

39. I dunno. She's only the RICHEST woman in show business

I really hate her. She doesn't care about these people.

[catzies]

32. This is how it worked for me w/Jeopardy and Ben Stein winnings.

You get a 1099 in January for your prize amount. That goes on your 1040 and is part of your AGI.

Part of the taxes you pay are calculated against your AGI.

Cars are a little different. I haven't won a car, but that's how it works with cash and prizes and that's how I know.

[VolcanoJen]

37. You were on Jeopardy and Ben Stein, catzies?

Why is this the first time I've heard this? How cool!!

"The Price is Right" is my ultimate fantasy, but I'm in awe of your accomplishment. :D :D :D

[catzies]

52. Jeopardy in '88, Ben Stein in '99. Yes, I won Ben Stein's money.

I know he's a GOP tool, but he was really nice to me.

[SoCalDem]

40. My friend won a showcase on Wheel of Fortune years ago

back when they had to "spend" the "money" they won, on a showcase that was pre-selected.. She ended up with so much J U N K ..A French Provincial dining room set (that THEY valued at $3,000.00), and a bunch of other stuff.. Some of it she actually had to refuse, because she knew she could neither use it or sell it.

The total "value" of the stuff she was 1099ed on was nearly $8K..After she spent months trying to sell the stuff, she ended up with about $400.00 more than the taxes she owed..

It was the biggest hassle of her life..:(

[Kenneth ken]

33. if you were actually

referring to takumi's post, you got your cliche confused.

The cliche is "never look a gift horse in the mouth." In essence that means if someone gives you something, it is bad form to whine about it being less than flawless or perfect; i.e. checking a horse's teeth to determine its age and/or health.

takumi pointing out that paying some taxes is still actually better than having to pay the entire $28,500 for the car, is in this case, fits perfectly the idea of not looking a gift horse in the mouth.

Your response would be appropriate if you meant to respond to the original post/news item.

:hi:

[Vitruvius]

71. With a $28K car, one can ALWAYS get a $7K loan, payable over several years

with the car as security. So Oprah's free cars are still a GREAT deal...

[kayell]

7. Most people of limited income would have purchased used or

paid for a less expensive car over a number of years. They would almost certainly not have saddled themselves with a $7000 bill due all at once. Lower income people don't have the cashflow for that expense.

They may very well be worse off than they would have been. Remember that if they decide to sell the car, which they may have to to pay the taxes, that they won't get anywhere close to it's new value, even though they will probably pay taxes on that.

[Ernesto]

19. Is this a nation of victims or what?

So they sale the damn car & pocket 20 grand..... Does that really sound so bad?

[Occulus]

22. that only works if they can have the car before they pay the tax n/t

[kayell]

23. Oh please, do you really know anyone who can sell a car for it's

new price? That thing loses value as soon as it' driven off the lot. Not to mention that most cars don't even sell new at the dealership for their sticker price. Certainly not a Pontiac.

[LSK]

49. so they sell the NEW car for $20k, pay taxes and are still 10k +

That would be assuming a drop of $7k for a used new car and taxes of $10k. I will take $10k any day. Give me a car.

[BiggJawn]

55. Oh, no! Cars are INVESTMENTS!

I've been told that a few times in my life. first time I said "Squeeze me? I pay 17 kilobucks for the damn thing, and the second the tyres hit the public street it's worth $14,000? Some kind of investment, I think..."

[catzies]

3. All game show prizes work the same way

Yes, I know that Oprah's not technically a game show but I've been on two game shows and that's how the system works.

[madmax]

4. Then some pundit got it wrong.

The day after the show I remember reading that Ponitac was paying the taxes and tags. I could be wrong. :P

[Wickerman]

9. I heard that, too

I wondered about the legality...

[Jacobin]

16. That was SALES tax they paid for

There's tax on a gift of that size from a non-family member.

Maybe Oprah could adopt them all and make a tax free gift.

Calling Tax Planners

[SoCalDem]

41. SALES TAXES they paid, but the car was a $28.5K GIFT..just

like INCOME.. They cannot legally pay the income taxes, because depending on your bracket, it would be different for everyone..

My husband gets a $500 a month car allowance, and that is considered INCOME..we pay income taxes on it..

[jumpstart33]

6. I thought that Oprah was paying the taxes also?

At any rate, a car is a hell of a gift.

[Toucano]

8. If Oprah paid the taxes

That payment would also count as income and be subject to taxes.

You can't escape it.

[napi21]

11. Yes & no. Operah could pay the taxes using certain calculations.

and the winner wouldn't owe anything. It's done every day in the business world, primarily when an employee is relocaated to another state. When the Company pays for expenses for that relocation, that $$ is considered as income by the IRS. The perform a calculation known as "grossing up". The employee receives reimpursement for the expenses + any additional tax consequences, and they just pay their taxes out of the reimbursement.

[Toucano]

15. Ah, yes!

I remember that practice now. Thanks for the clarification.

[Princess Turandot]

54. Couldn't she give them the money as a gift?..

that's taxable to the giver, not the receiver I believe, if it is over a certain amount. Pontiac could not make the cars gifts since that's their business but I think she could.

[Elginoid]

59. In the end, it would come out of the pocket of her heirs...

as a giver, you're only allowed a certain amount of tax-free gifts over the course of a life and death time.

of course that's all gonna change pretty soon anyway.
total abolishment of the estate tax is the kinda thing the lil'dictator's "people" are gonna want to get done pronto- and early on in the term.

[oneighty]

10. So you get a

seven thousand dollar loan against a twenty-eight thousand dollar car. Oh and get enough on the loan to cover collision insurance too.

I will take that any day. Ya hear Oprah?

180

[elf]

12. I think

there is a gift tax to pay!!! Every gift above $10,000 is taxable

[snippy]

14. Gift taxes are imposed on the donor, not the recipient, of a gift.

And the annual exclusion amount, which I think is now $11,000, is for each recipient.

[snippy]

13. I think the people who got the cars have a good argument that they were

gifts, not prizes. Unlike prizes, gifts are not subject to federal income tax. Either Oprah or GM should make this argument to the IRS on behalf of the people who received the cars. If that doesn't work then either Oprah's production company or GM should help pay the income tax.

[histohoney]

17. $2,000

I think (CPA's correct me if I am wrong) is the top amount for a gift that you don't have to pay taxes on.
Surley with a 28k car as calateral you should be able to get a $5,000 dollar loan.
Or sell the 28k car and get a cheaper 15K-18K car.
Or just refuse the gift and pay nothing.
Just a thought

[snippy]

20. No one who receives a gift of any amount has to pay federal taxes on it.

The donor would owe gift tax on a gift of over $11,000 to an individual donee. The amount subject to gift tax would be the amount in excess of $11,000. The $11,000 limit is per donee and per year.

[histohoney]

47. Thanks

I'm married to a CPA with an MTAX but I can NEVER get hold of him when I have a question.
Think I'll stick with chemistry

[gatlingforme]

18. Yeah you are right, but do you really think GM is going to do this?

or Oprah for that matter. GM already got their plug and Oprah got hers. That is all they wanted. I can't see where GM and Oprah are going to sit down and figure out how to help these people when it will not give them any type of exposure (other than bad) or would further any type of commercial value. It's all money. They won't waste their time actually "helping" people if it does not make money for them... IMO

[Booster]

26. Oh, for God's sake. They can always sell the car

pay the taxes and buy a cheaper car with the difference. That's the same as my financial adviser saying I should buy a life ins policy, from him of course, to help pay the taxes on the money I'm leaving my family. Give me a break; if somebody gave me $50,000, I would pay the taxes. Jesus.

[w4rma]

27. $7k if it puts you in the top income bracket, maybe.

Otherewise, I seriously doubt that it would run $7k for any of these folks.

The car is counted as extra income. $28k is probably only going to double the income of some of these folks.

Taxes aren't due for almost another year, anyway.

[Bimini_Twisted]

65. GMAFB. Dont't take the car if you don't want it but pleae QYB!!

[transeo]

28. Let me get this straight

Oprah's a big meanie because she gave people nice cars and now they have to pay taxes on it? Puhleeze....

Look, if they can't afford the taxes, sell the f'ing car, pay off the taxes and then pay cash for a car you can afford with the remaining funds. If they do this wisely they can get a new car AND have cash left over. They're still better off than they were before. What is the fuss about? Good grief! And yes, of course it was a publicity stunt, but people still got a $28,000 gift just for showing up and sitting in an audience on a TV show. I'd be thrilled if it were me.

These ingrateful people need to say "thank you" and then pull their heads out of the holes in the ground into which they've stuck them. If I give you theatre tickets you can't afford because I know you really want to see a show, but you have nothing to wear, is it my fault you need to go buy a new outfit? Hardly.

[SaintLouisBlues]

29. The article is misleading

snip: "People who got brand new cars in a surprise giveaway on "The Oprah Winfrey Show" are finding out that those vehicles aren't exactly free."

They are not "finding out" about the taxes. I happen to know that the winners were told on the spot about the tax implications. Take the $28K Pontiac, or leave it. Those were the options.

Everyone took it of course.

[merh]

30. A new car for $7,000 - what a deal!

Hey Oprah, invite me next time! Please louise - how many whiners frequent this forum?

[Bread and Circus]

31. Easy, with decent credit they can get a loan and put the car up as...

collateral.

Financed over 5 years, $7,000 is peanuts.

I don't feel sorry the recipients at all.

[LSK]

50. you dont even need good credit

You can find a loan with bad credit - they will just charge huge interest. But who cares, you are paying it back as soon as you sell the car.

[2Design]

57. Great idea!

[truthisfreedom]

34. you know, i just can't feel too bad about this. once you own a car, you

can take out a loan against its value. paying down a $7k loan over 4 years can't be terribly painful. and if you don't want to pay it, sell the car. it's pretty simple stuff. you get something for nothing, you have to pay taxes.

however, you can receive up to $10k per year in gifts without paying taxes...

[VolcanoJen]

35. Sell the car, pay the taxes, by a cheaper used car.

What's the problem? That's always been my ultimate The Price is Right strategy. :D

[Blue_Tires]

36. ??? this is nothing new....

20 years ago, I was reading about Wheel of fortune/Price is Right winners not being able to afford the taxes on their grand prize (cars, trips around the world, etc.)

Yes, they were a gift from GM and Oprah, but they were by no means obligated to accept them, so they should have kept in mind the potential tax hit

[theboss]

53. The problem with this shows is that the prizes are crap

They value a cheapo dining room table at about 6 times the price. This is a fully-loaded 2005 Pontiac.

Deal with it.

[okieinpain]

38. man this will play into the repugs hands.

[Streetdoc270]

43. people gripe over anything....

It like when we have the annual 'look at the size of the lottery jackpot' discussion ar work. You have people saying 'Yea but you would have to pay 50 million of 100 million prize in taxes' to which I reply " I would hand-deliver that check to the President directly and make him promise to put my name on a Tank!" :)

[librechik]

42. It was announced on the show that Pontiac would help with taxes

so this merely more "let's bash liberal Ophrah!" crapola.

The Pukkkes can't stand a successful woman who lives to help other women become successful.

And, ALL those women who got the cars were women who had written Oprah about their desperate need for a car--they were working women and mothers without relieable transportation.

[BiggJawn]

56. Uh, huh...SURE they were....

6 women from Indianapolis got new cars. Were these women who had old hoopdys that were a crap-shoot every time you turned the key?

Single moms, scraping to get to their fast-food gigs in a 20-y-o "K-Car"?

Shit, don't you WISH....

http://www.indystar.com/articles/1/179076-4421-009.html

<snip>
But now, back to current reality. Why would six Hoosier women -- all of them solidly middle-class, with gainfully employed, white-collar husbands, who mostly stay home with their kids -- be the recipients of such largess? (OK, in the interest of full disclosure, three drive older vehicles with miles ranging from 149,000 to 210,000. But none went on with the purpose of trying to win a car.) (Also in the interest of full disclosure, between them they have two Volvos and an aging BMW. This is not your old "Queen for a Day" crowd, when poor women were lucky to get a washing machine.)

<snip>

OHMIGAWD! a 149,000-mile-old VOLVO!



And read what Dan Carpenter, a writer with more "Liberalism" in the sweat dripping off his nutsack than most of us have in their whole bodies has to say about it....

http://www.indystar.com/articles/2/179618-6272-021.html

<snip>
Oprah didn't really give anything away, of course, any more than the Irsays or the Simons give anything away. When the Matinee Madonna handed out new cars to her entire studio audience, many of whom are suburbanites who own several automobiles, she was engaging not in an act of charity but rather in a $7 million commercial for Pontiac. A pretty good deal for the automaker, considering the show's viewer share. Plus, an opportunity to answer a challenge posed by countless thousands of Americans over the years: "You couldn't gimme a GM." Good business, great ratings. But it wasn't taken that way. No, the legions of Winfrey worshippers, affirmed by the news media, reacted as if their star had incarnated herself in the middle of a refugee camp in Chad and commenced turning rocks into Popsicles.
<snip>

Please read the article. Dan touches on other examples of our misguided hero worship...

[enki23]

44. you could buy a pretty decent used car for that money

.

[lumpy]

45. Were the cars a gift

or was it a contest?

[Generator]

46. Damn you Oprah Winfrey! What an outrage

This is breaking news?

[JPZenger]

48. If They Don't Like It, Sell the Car and Buy a Used One

If they can't afford the taxes, they can sell the new car, buy a good used car, and use the difference to pay the income taxes.

However, if the people on the show were as desparate as their friends led Oprah to believe, then they would NOT be in a 25% marginal Federal income tax bracket.

[theboss]

51. Then sell the fucking cars to a used car lot.

If you walk away with a profit of less than $12K, someone should kick you in the ass.

Jesus Christ. Give me a car worth $28K and I will figure out how to make the taxes work.

Pardon me as I transform into Denis Leary for a moment but: "Bunch of whining fucking maggots..."

[Pallas180]

58. Cmon guys. Would you rather take out a loan for 7thou or 28 thou ?

that's what I call looking a gift horse in the mouth.

[BiggJawn]

67. Uh, maybe I'd rather take out NO loan?

I can just imagine if somebody had given me a "Free" car 20 years ago when I was making $98 a week under Ronaldus Rex, then informed my that I needed to pay $7,000 in taxes on it.

OK, so for the purposes of the IRS, I just get saddled with $28,000's worth of extra "income" that, even if I wanted to liquidate, I would not get the full 28 kilobucks from the sale... so, I still have to pay taxes on a few thousand dollar's of paper income that never got anywhere NEAR my pocket....

Add to this the fact that this extra 28 Kilobucks would just about fuck me out of EVERY aid program my $6,000 annual income qualified me for....

[JSJ]

60. can't sell the car unless you own it- can't own it unless the tax is paid

Thanks, Opie- you big fat walking talking advert for self-agrandizement.

[shawn703]

61. Couldn't she have sold the cars to them for a dollar?

Then they'd only have to pay the sales tax right?

[Odd Little Man]

63. Having just a won a car this weekend

(a school raffle ticket that cost me a dollar)I can tell you that the IRS wants 25% of the value of the car up front. I paid that money and the TT&L and drove away in a new car. I can also at the end of the year write off any gambling lost I may have occur during the year against the 25% tax I paid. Don't you just love our tax system?

[mondo joe]

64. For God's Sake, Can't People Just GROW UP?

No one is FORCED to accept the car.

And the car can be sold, taxes paid and a tidy profit made.

Only in America could a gift of a new car be made intoa story of victimization.

[Kimber Scott]

66. Gawd. These people NEEDED cars. In other words they are in a low

tax bracket. I doubt it's going to hurt them that much, if at all. However, much it is, it's not the $28,500 the car is worth. Worst case, they can sell the car and buy something cheaper. This is a shame.

[BiggJawn]

69. If you're on Food Stamps or Section 8 housing....

What do you think an extra $28,000 of income is going to do to your eligibility?

Considering that it's a "paper" 28 kilobucks, not a REAL 28 kilobucks that you can use to offset the aid programs you just lost.

"I doubt it's going to hurt them that much, if at all."

Well, the stay-at-home Yuppy moms in Indiana who got news cars probably weren't hurt. You may be right there....

[dansolo]

68. Sell the car and buy a cheaper car with the money

If the person is really in such a dire financial circumstance that they can't pay the taxes, then they could sell the car, and with the proceeds, buy a cheaper car and still have enough to cover the taxes from the first car. Even if you reduce the value to cover the taxes and depreciation, it is essentially a $16,000 gift.

[WinterStorm]

70. Do they have to come up with that cash before leaving the lot?

If so I would never be able to take that car home.

Kind of shitty!