After the second day home of being sick, I succumbed & flipped the TV on this morning. No, not Jerry or Maury but game shows came on. There was one trip given away to Puerto Rico for $6000+ & one to Bahamas for $8406.
Since we know they also give the highest MSRP to make the prize seem even better & you have to pay taxes on that is winning really a good deal?
I looked quickly - Sandals, an all inclusive in the Bahamas can be had for $3000 for two people for a week, with airfare from LA for less than $1000 more, say $3850 all in. (The trip included round-trip airfare from LA; would it cost anymore if you wanted it from your local city?) However, I don’t believe their trip was an all-inclusive, which means you’ll need some spending money for some meals & all drinks. Things like tips & off-premises spending/souvenirs would be the same for either trip so are a wash for this calculation.
At a 25% tax rate, their trip is roughly $1000 savings over what I could do on my own at Sandals; however, it’s still going to cost me ≈ $2800 for a trip that may neither fit in with my budget or my available PTO from work (assuming you already have your vacation booked for the year; maybe you go to the same place every year with family, etc.)
I’d be afraid that I couldn’t sell it for enough to cover the tax due, which means ‘taking’ the trip would end up costing me money. Is it really a good deal, & what percentage of them get left at the studio door when the winner realizes how much they have to cough up?
What about other prizes? Someone won new kitchen appliances, at a MSRP of over $5000. Yeah, they were nice, but mine aren’t that old that I want to spend $1300 to replace them, & if I took them & sold them, I lose use of the garage until I was able to unload them.
The announced value of the vacation package is the peak season price, but you’ll only pay tax on what the actual value of the package at the time you take it.
Sometimes they give you cash instead of the announced prize.
I have a room-size braided rug that was a game show prize. It was a great deal for me, but I didn’t win it - someone else did, and he unloaded it for a great price online.
I know someone who won a scooter on Let’s Make A Deal; she had to pay taxes before they’d give it to her; no cash-out option.
It then sat in the corner of her bedroom (small apartment) until she sold it, unused.
If I win a car, I can keep it & sell it as a very new used car, with the related depreciation hit, I presume. Is it possible to have the dealer ‘take it off my hands’, splitting the difference between what he could sell it for new & what I could sell it for after factoring in depreciation? Or, could I advertise it on CraigsList & have my newly-found ‘friend’ take the car from the dealer with the A title?
I had a friend that won the Price is Right Showcase Showdown a few years ago. She did take delivery of some of the prizes like a jet ski that she wanted anyway. I can’t see how you would lose money on the larger physical prizes even if you don’t want them yourself. Your taxes will only be about 1/4 of the value and you can just sell them to someone brand new as a great deal and still make money.
I am not sure how every show works but I have heard that many of the prices presented are just a cash marker in the case of things like cars or furniture. You can pick different ones after you win and there may even be a lesser cash option (you can’t lose money with cash).
However, I agree that the trips typically given probably aren’t worth it even at the tax value. It shouldn’t cost $6000 to go to Arizona for a week especially if you live anywhere in the West. The price of most of the trips is so vastly inflated that you would probably come out equal or better just paying for somewhere that you really want to go and pay for it yourself.
All of this ignores the teaser prizes like those those on Let’s Make a Deal that offered a really great prize like a goat and then wouldn’t give Old Billy to you even if you threw the game on purpose to bring him home. Goats are awesome and there is nothing fair about that.
A teacher of mine showed us a tape of him winning a hovercraft on the Price is Right. He said the list price was $13K, street price was $8K and he sold it in the show parking lot for $5K. He said the IRS tried to tax him on the $13K list price but he negotiated it down. (I’m not sure how far down.)
It’s not exactly a game show, but I always wonder about the HGTV Dream Home sweepstakes, which they do at the beginning of every year. You’re supposed to enter to potentially win a house, in this case a 3,200 square foot waterfront house, with a pool, on St. Simons Island in Georgia. Worth $1.7 million, according to the website.
Even if winning meant that you owned that house free and clear, imagine the property taxes and insurance costs on a place like that, not to mention the costs of upkeep. And actually living in it would mean moving to Georgia, where you probably don’t know anyone and don’t have a job lined up.
I wonder if the people who win these houses (and there do seem to be winners every year) just put them on the market right away, hoping to sell them for cash rather than go to the trouble of living in them. That’s what I would do.
I think someone posted on this board some time back that they (or a friend) won an expensive car. The show made an arrangement with a local dealer, who let the winner either take delivery of the expensive car and pay the taxes, or instead get a cheaper one plus enough cash to pay the taxes.