Better to be a Loser?

[TheInquisitiveOne]

Good evening everyone!

Ever since I have joined this board, an interesting thought has been in the back of my mind.

As viewers, we generally like to see contestants win big prizes, such as a $50,000 car or three cars in one sitting. However, do the contestants really have it good?

Take this, for example: you just lost on Triple Play. Would you be upset because you lost, or more relieved because you do not have to pay the taxes that come with the cars? I would like to see the general consensus of the group here.

As always, responses are more than welcome!

The Inquisitive One

[SplitSecond]

[quote name=\'TheInquisitiveOne\' date=\'Jun 7 2004, 05:41 PM\'] Take this, for example: you just lost on Triple Play. Would you be upset because you lost, or more relieved because you do not have to pay the taxes that come with the cars? [/quote]
I can't think of many game show contestants who would have a need to *add* three cars to their driveway.  If you wanted a car (or cars), but couldn't handle the taxes, you could easily sell one or two of those cars back to the dealer (or arrange to sell them privately, where you can often make more money), then apply some of the proceeds to pay for the taxes.  You could also sell your existing car(s) to aid the cause if you really want three new cars that badly.

There's no need to want to engineer a loss just to avoid a tax burden - or even if you don't like the cars, especially in light of the fact that you can usually work with the dealers that supply the cars to get alternate models

[tvwxman]

[quote name=\'SplitSecond\' date=\'Jun 7 2004, 08:04 PM\'] [quote name=\'TheInquisitiveOne\' date=\'Jun 7 2004, 05:41 PM\'] Take this, for example: you just lost on Triple Play. Would you be upset because you lost, or more relieved because you do not have to pay the taxes that come with the cars? [/quote]
I can't think of many game show contestants who would have a need to *add* three cars to their driveway.  If you wanted a car (or cars), but couldn't handle the taxes, you could easily sell one or two of those cars back to the dealer (or arrange to sell them privately, where you can often make more money), then apply some of the proceeds to pay for the taxes.  You could also sell your existing car(s) to aid the cause if you really want three new cars that badly.

There's no need to want to engineer a loss just to avoid a tax burden - or even if you don't like the cars, especially in light of the fact that you can usually work with the dealers that supply the cars to get alternate models [/quote]
 Funny enough, I was thinking of the same question the other day when Golden Road on TPIR was played for a motorhome. My first thought was : what the heck would I do with a Motorhome, AND a $28000 tax burden on a $70K prize?

Sorry, I can't justify it...yeah, I could sell it cheap ($40-50K) to make $22K after the taxes, but it sure does sound like a lot of work. Like, where would you put it while you were selling it, and WHO is in the market for a motorhome?

Just my two cents.

[That Don Guy]

[quote name=\'tvwxman\' date=\'Jun 7 2004, 08:11 PM\']Funny enough, I was thinking of the same question the other day when Golden Road on TPIR was played for a motorhome. My first thought was : what the heck would I do with a Motorhome, AND a $28000 tax burden on a $70K prize?

Sorry, I can't justify it...yeah, I could sell it cheap ($40-50K) to make $22K after the taxes, but it sure does sound like a lot of work. Like, where would you put it while you were selling it, and WHO is in the market for a motorhome?

Just my two cents.[/quote]
(a) See if it fits in your driveway - so what if there's a little weather beating on it?  It's a $70,000 never used (except to drive it to your home) motor home being sold for $50,000.

(b) I think there's a market - especially if it's on sale.

The two things that come to my mind are:

One - remember the old 52-day Mediterranean cruise that Dealer's Choice and $100,000 Name That Tune used to give away?  Since you can't sell trips, it's either come up with the $3000 in taxes or don't bother.

Two - when Wheel gives away treasury notes, or even savings bonds, they include all of the interest when showing what the prize is worth.  (For example, a "$75,000" note is worth only $37,500 if you cash it in immediately.)  Can the IRS tax you on the whole amount up front?

-- Don

[parliboy]

IIRC, if you sell a prize, you are double-taxed: once for the prize, and once for the money generated from the sale of that prize.  So you're going to have a tax burden on the $70k motorhome, plus another tax burden on the $50k you sold it for, and between the two you're in a very high tax bracket, making limited profit on the $50k.

[Matt Ottinger]

If we're talking specifically about TPIR, I can't imagine anyone ever deliberately blowing a game -- or being happy that they lost -- just over the tax issue.  Why even bother wanting to be on the show?

Still, the tax burden is a HUGE issue, and I'm sure the vast majority of "winners" don't realize just how difficult it will be to deal with it, especially on high-end luxury items that just aren't practical to their lives.  Triple Play is an excelent example, as is just about every flashy prize they offer on the prime-time shows.

[SplitSecond]

[quote name=\'tvwxman\' date=\'Jun 7 2004, 06:11 PM\'] Funny enough, I was thinking of the same question the other day when Golden Road on TPIR was played for a motorhome. My first thought was : what the heck would I do with a Motorhome, AND a $28000 tax burden on a $70K prize?

Sorry, I can't justify it...yeah, I could sell it cheap ($40-50K) to make $22K after the taxes, but it sure does sound like a lot of work. Like, where would you put it while you were selling it, and WHO is in the market for a motorhome?

Just my two cents. [/quote]
 Almost every dealer who supplies vehicles and RVs for game shows will GLADLY buy back a vehicle you've won, even before you take it off the lot.  If I could stand to make $25,000 after taxes just by making less than 10 calls to a dealer and my accountant, I'd do it in a heartbeat.

You can often prepare to sell the vehicle privately before you even drive it off the lot.  The buyers are usually ecstatic because they're getting a new vehicle at far below the sticker price, and you as a "broker" can stand to make far more than the dealer would be willing to give you.

Besides, the minor headaches associated with turning this profit are FAR easier to deal with than the shame of being nominated for Misplay of the Day by at least ten different people within five seconds of you throwing the game.

[SplitSecond]

[quote name=\'parliboy\' date=\'Jun 7 2004, 06:37 PM\'] IIRC, if you sell a prize, you are double-taxed: once for the prize, and once for the money generated from the sale of that prize.  So you're going to have a tax burden on the $70k motorhome, plus another tax burden on the $50k you sold it for, and between the two you're in a very high tax bracket, making limited profit on the $50k. [/quote]
 So $0 and a telephone from Invention Submission Corporation is preferable to $10-20K and a few extra 1099's next year?

[Matt Ottinger]

[quote name=\'parliboy\' date=\'Jun 7 2004, 09:37 PM\'] IIRC, if you sell a prize, you are double-taxed: once for the prize, and once for the money generated from the sale of that prize. [/quote]
 I'm not an expert on taxes, but I seriously doubt this is true.

My understanding has been that if you sold a prize and got a fair-market price on it (i.e. you didn't sell a car to your uncle for a dollar) then you declare that price as the value of the prize and you pay taxes on that amount.

Gee, if only we had somebody on the board who had been on a bunch of game shows and would know stuff like this for sure -- maybe somebody with a really cool voice...

[tvrandywest]

[quote name=\'Matt Ottinger\' date=\'Jun 7 2004, 06:11 PM\'] Gee, if only we had somebody on the board who had been on a bunch of game shows and would know stuff like this for sure -- maybe somebody with a really cool voice... [/quote]
Oh you sweet talking devil you! Unless you were looking for Ben Trittle!!

I'm not gonna run the clock with my most excellent accountant for this one, unless somebody can make a good argument to the contrary. Here's how I see it.

It's never bad to have $15,000+ credit at a car dealership. If you can't use it, there's gotta be someone in your life who would show appreciation in the form of cash for your thoughtfullness.

The question of "double taxation" in a non-issue. Do we believe that everybody  who sells a personal item (not a business asset) to another person, via e-bay for example, is required to declare the income from those sales? Everybody who ever held a yard sale would be sharing the cellblock with the e-bayers. Unless you are in the business of buying and selling items, such as an antiques dealer, I believe there is only a potential income tax liability if the cost of the item you sold was taken  earlier in part or in whole as a tax deduction and/or was being depreciated for tax purposes. In that case, if I bought a $2,000 PC for business use and took a tax deduction and/or was depreciating the PC as business equipment I would have to document its subsequent sale, and it would likely have tax consequences.

But because I don't like the fact that 100% of HP's tech support is overseas, and seems to be entirely in India, I could sell you this lousy HP PC without triggering a taxable event. That's because I bought this PC entirely to look at porn and I am not in the porn industry (despite my namesake). So as I didn't try to claim any portion of this PC as a business expense when I purchased it, its sale is not a taxable event.

The only tax that MAY be applicable in such cases would be sales tax. And that's a whole other area in which I claim no knowledge. But I believe that dodging sales tax was the genesis of that entire business of selling things to your uncle for $1.

We covered most of the following in a previous thread. Fair Market Value only enters the picture when you try to save some tax liability on large prizes. Typically the IRS Form 1099 that you receive from the network or production company states the manufacturer's suggested retail value of a prize. That's the highest price you will ever see attatched to that item. You may declare a lower Fair Market Value based upon sales of identical items in the open marketplace. Be prepared for an audit by having tons of documentation, such as advertisements in which the manufacturer's name and model number are included with the lower sales prices for the item.


Now a question back. Other than tech support issues is there a reason to buy from Dell at a higher price when the PCs from e-machines and all them other names at the big box stores advertise the same hardware specs at a lower price? Is 3.0 Mhz, 512 RAM, 80 Gig the same and equally reliable no matter whose name is on it?


Randy
tvrandywest.com

[Dbacksfan12]

[quote name=\'tvrandywest\' date=\'Jun 7 2004, 10:46 PM\'] Now a question back. Other than tech support issues is there a reason to buy from Dell at a higher price when the PCs from e-machines and all them other names at the big box stores advertise the same hardware specs at a lower price? Is 3.0 Mhz, 512 RAM, 80 Gig the same and equally reliable no matter whose name is on it?

 [/quote]
 Hopefully I understand the question.....but from my dealings with computers, not only does Dell have excellent tech support, but E-Machines, Compaq, etc., are generally pieces of crap.

[MikeK]

[quote name=\'Dsmith\' date=\'Jun 8 2004, 12:00 AM\'] Hopefully I understand the question.....but from my dealings with computers, not only does Dell have excellent tech support, but E-Machines, Compaq, etc., are generally pieces of crap. [/quote]
 Not when they're free.  (Thanks Paranoia!)  Four years later, the only replacement part on the Paranoia eMachine is a new hard drive, installed late last year.  The old HD likely crapped out as my family never running ScanDisk or defrag after I gave them that PC 2+ years ago.

Based on my past and current experiences, I'm an HP man forever and not just with desktop PCs.  Their printers and digital cameras are quality products as well.  Vive le Hewlett-Packard!

[dzinkin]

[quote name=\'tvrandywest\' date=\'Jun 7 2004, 11:46 PM\'] Now a question back. Other than tech support issues is there a reason to buy from Dell at a higher price when the PCs from e-machines and all them other names at the big box stores advertise the same hardware specs at a lower price? Is 3.0 Mhz, 512 RAM, 80 Gig the same and equally reliable no matter whose name is on it? [/quote]
 Dell all the way for me... it's what we use in my schools and what I recommend to my clients.  My schools had good luck with HP when we bought from them -- Dell offered us a lower price this time around, and their tech support has been nothing short of phenomenal on the rare occasions when we need it.

[parliboy]

[quote name=\'tvrandywest\' date=\'Jun 7 2004, 10:46 PM\']
Oh you sweet talking devil you! Unless you were looking for Ben Trittle!![/quote]

Well, he sure as hell wasn't looking for Zach.

I'm not gonna run the clock with my most excellent accountant for this one, unless somebody can make a good argument to the contrary. Here's how I see it.

It's never bad to have $15,000+ credit at a car dealership. If you can't use it, there's gotta be someone in your life who would show appreciation in the form of cash for your thoughtfullness.

I do admit that I appreciate the idea of selling the credit to avoid the gift limit.

Meanwhile I did some reading before I responded, so that I wouldn't look like more of a jackass than I have already.  So mea culpa, courtesy of Sec. 1001

If you sold an item for more than its value (a possiblity given fair market value) you would still be taxed on the difference, though.  And for that matter, if you buy something for less than its value, you can be expected to pay up.  So whoever you sell it to still has to pay taxes on his or her gain.

Now a question back. Other than tech support issues is there a reason to buy from Dell at a higher price when the PCs from e-machines and all them other names at the big box stores advertise the same hardware specs at a lower price? Is 3.0 Mhz, 512 RAM, 80 Gig the same and equally reliable no matter whose name is on it?

I build my own machines (three cheers for Thermaltake!).  That said, when I have used other machines, there's been a clear quality hierarchy for some time now, and Dell really is at the top of the list in my book.  I will not dispute the comparisons between Compaqs and crap.  And while I don't doubt HP has good external peripherals (though based on current ink technology I'd go with Epson for non-laser), their computer systems are middle-of-the-road IMO.

The advertised specs are the same between computers, it's true.  But I wouldn't buy computer gear based on advertised specs any more than you would buy microphones and headphones based on them.  (In fact, I remember people expressing clear brand loyalties on that particular subject previously.)

That 80 Gig drive -- is it 5400 RPM or 7200?  That 512 Meg of Ram, what speed is it?  What brand is the memory?  What about the specs you didn't list?  ?What about the motherboard?  Separate peripheral cards, or integrated audio and video and lan; and if integrated, what's the CPU usage when activating them?  Are the components friendly to overclocking?  Are any of the parts proprietary, thereby lowering the usable life of the computer down the road?  Etc, etc.  And yeah, like you said, the tech support is a cost factor as well.

Then again, I'm my own tech support, so screw all of them.

On a completely unrelated note of my own, I just want to say that VoIP service really, really rocks.  Just wanted to say that.

[tvrandywest]

[quote name=\'parliboy\' date=\'Jun 7 2004, 09:21 PM\'] If you sold an item for more than its value (a possiblity given fair market value) you would still be taxed on the difference, though.  And for that matter, if you buy something for less than its value, you can be expected to pay up.  So whoever you sell it to still has to pay taxes on his or her gain. [/quote]
Pardon my density, it's late. Is this contrary to what I believe and posted? If so, I'll happily use my CPA as a "phone-a-friend"  ;-)

The advertised specs are the same between computers, it's true.  But I wouldn't buy computer gear based on advertised specs any more than you would buy microphones and headphones based on them.  (In fact, I remember people expressing clear brand loyalties on that particular subject previously.)

Indeed!

That 80 Gig drive -- is it 5400 RPM or 7200?  That 512 Meg of Ram, what speed is it?  What brand is the memory?  What about the specs you didn't list?  ?What about the motherboard?  Separate peripheral cards, or integrated audio and video and lan; and if integrated, what's the CPU usage when activating them?  Are the components friendly to overclocking?  Are any of the parts proprietary, thereby lowering the usable life of the computer down the road?  Etc, etc.  And yeah, like you said, the tech support is a cost factor as well.

I'd try to answer if I understood the questions!

Then again, I'm my own tech support, so screw all of them.

I'm so jealous!

So, dense as I am tonight, I guess my next move is to call Dell and feel confident that spending that extra $300+ over the cost of the no-name PC with similar sounding specs is a wise investment. Many thanks!


Randy
tvrandywest.com