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Originally posted by kiml122
As like all shows when you win something or with anything you win you have to pay the taxes on it. I doubt that a car that cost 26k or howevr much it cost, will actually cost them $7k in taxes, depending on where they live. I know that the county that I live in the sales tax is only 6%, so if they get the car from their town which is what is happening so that they can get what they want in the car, I can't see any city having a sales tax of 27% that they would have to pay $7k in taxes. But hey if someone does live in a city or county where the sales tax is 27%....that really bites.
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You are not paying sales taxes, you are paying income taxes, because that what the gub-mint see it as--INCOME. My understandind is that none work related income like this is taxed at a higher rate and typically the taxes come OFF THE TOP--not when you file your taxes. I know they do that with the lottery. 7,000 on a 26K car is about 28% taxes which is about right for income taxes.
A radio station here gave away a house, car, furniture and a bunch of other stuff. Part of the prize was a "morgage" because people were going to have to pay taxes on all of that stuff.
It is also not unusual for people on game shows like the Price is Right to sell a bunch of their smaller stuff (the refrigerator, scooter, etc.) to pay all of the taxes.
One last things about game shows and taxes....I read somewhere that the show Extreme Makeovers (That's the one about the houses right?) trys to get around the tax issue by "renting" the person's house for 7 days for the value of the renovations. The IRS allows you to rent your primary residence for up to a certain number of days a year and not claim it as income. Lots of people tried to do this during the 96 Olympics in Atlanta.