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What is the tax consequence of winning a raffle prize?

September 15, 2006

Date:  Fri, 16 Jun 2006
From:  Khanh

What is the tax consequence of winning a raffle prize? Which prize would have a better tax result: a home worth $800,000 or $500,000 in cash?

Thank you.

Answer

Date:  30 Jun 2006

Hello Khanh,

Raffle prizes are taxable income. The tax for a home worth $800,000 would be higher than for $500,000 cash. The home would still be a better prize, after income taxes. If you wanted to keep the home, you could probably borrow the money using a mortgage secured by the home to pay the tax.

Good luck!

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