Win a Froggy Bottom guitar in raffle

[JohnW63]

https://nhmcrafflereadycom.raffleready.com/musicians-healthcare-fund

MSRP at $20,000 ! Dang.

I got my one ticket purchased. Only 1500 to be sold. They have a bit over 100 tickets left , as of this posting. 25 bucks a ticket. You can buy multiples and they give you a discount for doing so.

 

[guildman63]

I just bought my ticket.

 

[txbumper57]

That is pretty cool. Froggy Bottom makes some fine guitars. However, The $20,000 MSRP translates to the guitar actually valuing for sale between $12,000-$15,000. 1500 tickets at $25 a pop equals $37,500. You figure if everyone got the discounted ticket price of 6 for $125 it is closer to $31,250. That means there is a good amount of the money going to the musician's injury fund depending on what percentage is taken for the Organization that is putting on the raffle. (I looked through the agreement and no percentage is listed.) If you spend $125 on 6 tickets and win the guitar though, it would all definitely be worth it if you can pay the taxes.each:

After reading the Agreement in Terms and Conditions there is a catch. If you win the guitar, you are responsible for all applicable Federal and Local taxes and there will be Federal tax paperwork provided. It states the IRS considers this a prize and not a gift so you will be responsible for the prize tax of both Federal and State levels (anywhere between 25%-39.6% of the prize amount depending on your tax bracket) off of the $19,930 value of the guitar. That would equate to Federal tax owed of anywhere from $4982.50-$7,892.28. State would depend on where you live. Man I am glad I read this before I bought a ticket!

 

[guildman63]

Tx,

I'm not sure that is a "catch". Any time one wins a raffle, whether they win a guitar strap, a guitar, a car, or a house, the value of the prize is considered ordinary income which requires that taxes be paid. That goes for game show prizes as well.

My question is this. If the winner sells the guitar for $15000 can they then declare the loss of $5000 on their tax return?

 

[JohnW63]

Yeah. I knew there would be a tax implication. I need to find out what my amount would be. Normally, I'm in the 13% Fed bracket. If this "income" pushes too far up, I could end up in the 25% group. California State ? All they ever want is MORE.

I wonder if they would allow a lesser guitar to be substituted at the winners request ?

 

[txbumper57]

Tx,

I'm not sure that is a "catch". Any time one wins a raffle, whether they win a guitar strap, a guitar, a car, or a house, the value of the prize is considered ordinary income which requires that taxes be paid. That goes for game show prizes as well.

Very True Guildman, But it is not everyday that someone could win a guitar that would put them in another Tax Bracket! LOL!

 

[JohnW63]

It is a "little known" secret that a good number of winners on game shows, like The Price is Right, can't afford to accept the prizes they win, because of the tax hit. It doesn't help that they inflate the prizes value a lot, which makes the taxes all the higher.

 

[adorshki]

Very True Guildman, But it is not everyday that someone could win a guitar that would put them in another Tax Bracket! LOL!

Yep it's a genuine irony.
I hope some day I'll be rich enough to be able to afford to save $10,000 on an item, after taxes.

 

[JohnW63]

OK, here is the weirdest thread veer I have ever started...

In my case, if I won, it would put me and my wife into the 25% Fed tax bracket. Who knows what the state of Ca would claim I was. But, for the feds alone, that would be around $5000. Plan B would be to sell the guitar at a price to move before I owe the taxes on it, for at least that amount plus some. For arguments sake, let's say I sell it for $10,000. I stash $5000 for the tax bill to come and I pocket the left over funds, with the idea of buying what I really want.

If this scenario happened to you... what would you spend the 5 grand on ?

For me... I'm looking for a New Hartford D-55 with DTAR. Maybe a good deal on an F-512 for the rest.