DanH

DanH

Legacy Member
Mentor
Gang,
Big day here. Last night I got a call from OSH. I won the EAA
Sweepstakes 2005 Husky A1-B on floats.

http://www.airventure.org/2006/events/sweepstakes.html

The EAA will issue a 1099 in the amount of $250,000 for the prize
package. The tax bill seems to be 28%, or $70,000, and is due at delivery.
I will do that (obviously), but I'm not sure I want to tie up the money long term. I already have a flyer and a project, floatplane insurance is expensive, my daughter starts college next week, the house needs a new roof, blah, blah, blah...

I'm going to open the floor to offers of all kinds and see what happens. Anybody want to buy a new set of Wipline 2100 amphib floats? Want a 100 hour A1-B, with or without floats? Want to trade a nice Model 12 and pay the tax bill? Obviously I like RV-8's and F-1 Rockets. Also like the new fixed gear Lancair as well as classic round engine cabin airplanes. Don't care for conventional spam cans. Please, no silly proposals.

Never bought a lotto ticket in my life, but I sent in lots of those little EAA sweepstakes tickets. Hey, dumb luck is better than no luck at all <g>

Dan Horton

334-244-6400
Fax 334-272-5860
Toll Free 877-206-0679
 
Congratulations

I was really hoping to win it :( but congratulations are definetly in order. Very cool!
 
Cool!

Way cool! I am glad it went to one of us (VAF'ers). :)

Keep in mind, if you trade the plane, that's generally considered another transaction and can come with an additional tax bill (from your state).
 
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Wow! Totally speechless, Dan. :eek: :eek: :eek:

Congratulations on winning the prize of a lifetime !!!!!!!

I won a toaster once and thought I struck gold.

Best,
Doug
 
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Very cool. Never thought about the fact that winning a big price could be a big burden. Coughing up $70k on a moment's notice sounds like fun. :rolleyes:
 
Dan,

You might consider calling up Troy Coker (he's in here somewhere). He's a finance guy and arranges loans and stuff (unusual loans like you would need).

Might be a short term solution that would allow you to keep the plane for a bit and still sell sometime for a huge profit.

b,
d
 
Congratulations! I (really, really) wish I had your problem. This is the best package EAA or AOPA has had in years for the sweepstakes plane (in my opinion)!

You might trying calling all the AOPA winners from the last few years. Most of those have sold, so I'm sure they would have some good suggestions.

Good luck... as if you really need any!
 
Congratulations!

28% sounds like a lot, what taxes are you being hit with? That said I've yet to win anything valuable and I'm not an accountant.

How long do they give you to take delivery of the new bird?
 
Wow, nice! I wish I had your problem as well. I'd go for Trade-A-Plane, and hype that it was EAA's bird, you might get a premium for that initially.
 
<<what taxes are you being hit with?>>

The nice lady at EAA HQ said a 28% gift tax. I'll be turning that issue over to my CPA today. Smart guy, so we'll see what happens. The interesting thing is the pay-tax-up-front clause in the Sweepstakes rules. It would be a heck of a lot more convenient if the tax wasn't due until next April. I suspect it has something to do with tax issues related to gambling. Dunno, I don't do casinos either. Anyway, I can round up the money and I've certainly had worse problems <g>.

<<How long do they give you to take delivery of the new bird?>>

The EAA HQ folks haven't had a spare breath in two weeks, so right now I don't think they care about transaction speed.

Dan
 
DanH said:
<<what taxes are you being hit with?>>

The nice lady at EAA HQ said a 28% gift tax. I'll be turning that issue over to my CPA today. Smart guy, so we'll see what happens. The interesting thing is the pay-tax-up-front clause in the Sweepstakes rules. It would be a heck of a lot more convenient if the tax wasn't due until next April. I suspect it has something to do with tax issues related to gambling. Dunno, I don't do casinos either. Anyway, I can round up the money and I've certainly had worse problems <g>.

<<How long do they give you to take delivery of the new bird?>>

The EAA HQ folks haven't had a spare breath in two weeks, so right now I don't think they care about transaction speed.

Dan
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Nice lady at EEA HQ is amiss. It is income taxes. Don't know where you live but most likely your state will tax it too. 28% is the highest 'standard' IRS income tax rate [there are higher].

Winning is earnings in the IRS' eyes.

John Stobbs
CPA/PFS, MBA, RIA [and more alphabet soup...lol]
 
Dan,

Congratulations!

I only know this from a friend that won a Harley at a raffle. You can contest the value down to wholesale/resale value, i.e. Manufacturers price to dealer. Not retail. That saved him almost $1000. He kept the Hog. See a CPA/Tax accountant to be sure.
 
Wow! From now on, I'm 'selling' my sweepstakes entries to my self-directed Roth IRA. That way any winnings will be won by the tax-free by the Roth IRA, not by me.
 
taxes

DanH said:
<<what taxes are you being hit with?>>

The nice lady at EAA HQ said a 28% gift tax. I'll be turning that issue over to my CPA today. Smart guy, so we'll see what happens. The interesting thing is the pay-tax-up-front clause in the Sweepstakes rules. It would be a heck of a lot more convenient if the tax wasn't due until next April. I suspect it has something to do with tax issues related to gambling. Dunno, I don't do casinos either. Anyway, I can round up the money and I've certainly had worse problems <g>.

<<How long do they give you to take delivery of the new bird?>>

The EAA HQ folks haven't had a spare breath in two weeks, so right now I don't think they care about transaction speed.

Dan
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so if its a gift tax and then you sell it do you then pay capitol gains tax on it.? my wife has informed me that since im an a&p when i sell my plane (like im gonna sell it) :rolleyes: (or maybe she has something up her sleeve :eek: )that i will have to most likely pay a tax on it because im a "professional" and it could be considered a job. i say B/S
 
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Deuskid said:
Don't know where you live but most likely your state will tax it too
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If I had won this... I would have it registered, delivered to, and stored in Oregon or Nevada (or some other state w/o sales/use tax), not in California where I live. Or else I fear CA would want another 8.75% in use taxes. Just something to consider.
 
2005 Husky problem

Congrats! :eek:

Guess I can cancel the boat/plane lift I had on order.

I live on a lake and have a pier and had a spot all picked out.

Guess I picked the wrong tickets but glad one of us got it.

Fly safe.

Jim
 
RV7Factory said:
If I had won this... I would have it registered, delivered to, and stored in Oregon or Nevada (or some other state w/o sales/use tax), not in California where I live. Or else I fear CA would want another 8.75% in use taxes. Just something to consider.
Click to expand...


not a sales tax issue... it is an income tax issue...

John
 
gpiney said:
Dan,

Congratulations!

I only know this from a friend that won a Harley at a raffle. You can contest the value down to wholesale/resale value, i.e. Manufacturers price to dealer. Not retail. That saved him almost $1000. He kept the Hog. See a CPA/Tax accountant to be sure.
Click to expand...

This can work... you must add to income the fair market value of the item won. Often time MSRP is inflated. Best to find a couple of real transactions to prove value. I've always thought if I won something big I'd list it for sale in several places and offer it for 'Best Offer'... and then document the bids... If I wanted to keep it I'd simply have a 'reserve' that wouldn't be met - If wanted to get rid of it then I'd sell it and have the cash to pay for the taxes and pocket the rest...

ymmv

John
 
mdredmond said:
Wow! From now on, I'm 'selling' my sweepstakes entries to my self-directed Roth IRA. That way any winnings will be won by the tax-free by the Roth IRA, not by me.
Click to expand...

Won't work. There are specific requirements as to what an IRA hold as an investment....

btw....

you all know the value of free advice... right?/........ lol :eek:

Dweeb John
 
cytoxin said:
so if its a gift tax and then you sell it do you then pay capitol gains tax on it.? my wife has informed me that since im an a&p when i sell my plane (like im gonna sell it) :rolleyes: (or maybe she has something up her sleeve :eek: )that i will have to most likely pay a tax on it because im a "professional" and it could be considered a job. i say B/S
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nope... you win it then you pay taxes on it [income taxes] then your basis is the amount of income you paid taxes upon. Sell it the next day for that price and you have no gain. If you want long term cap gains rate [and assuming it appreciates it value to have a cap gain]... need to hold it a year...

John
 
cytoxin said:
so if its a gift tax and then you sell it do you then pay capitol gains tax on it.? my wife has informed me that since im an a&p when i sell my plane (like im gonna sell it) :rolleyes: (or maybe she has something up her sleeve :eek: )that i will have to most likely pay a tax on it because im a "professional" and it could be considered a job. i say B/S
Click to expand...

If you build planes for a living [eg produce one or more a year or something] then it would be inventory to you and you wouldn't be able to do cap gains. let me give you an example: if you have a used car dealership and you sell cars for a living then you can't sell a car and use cap gains. if you have a paint shop and you sell your personal car you can use cap gains [if it has appreciated]. It gets 'gray' if you sell several cars a year... 'facts and circumstances'... if it is a meaningful amount of your annual revenue then probably would have to consider it a line of business... your wife may or may not be right...

John
 
N674P said:
And just a few years to catch Richard Hatch...
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I'm just happy they made him wear clothes... i did have to wonder tho... putting a gay guy in jail... is that much of a punishment?....

john
 
Both!

Deuskid said:
not a sales tax issue... it is an income tax issue...
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Exactly, but this is the great state of California where you will pay Income tax to the Franchise Tax Board AND Use Tax to the Board of Equilization, and receive no credit for either (from what I am told by the pros). I have no idea what would happen in the winner's state, but in CA you would probably be hosed (pay both), hence why *I* would register it out of state. Thank goodness I don't have these problems. :D
 
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