Congratulations! You’ve just won a fabulous trip for two to Fiji on some TV game show. The only problem is you can’t go to Fiji since being in the tropics would trigger some awful medical condition. Can you ask for the cash equivalent instead, and will they usually give it to you?
Have any dopers been on ‘Wheel of Fortune’ or ‘The Price is Right’ and won a significant non cash prize, such as a trip?
Game shows do offer the cash equivalent for Fabulous Prizes, which is useful since you have to pay income tax on the cash value of any prize, anyway. My understanding is that most Price is Right contestants opt for the cash equivalent.
Here is a Q&A with someone who appeared on The Price is Right. It explains the process of receiving the merchandise and goes into the tax implications. She does not mention the possibility of taking the cash equivalent of prizes, but does mention that some people opt to forfeit prizes to avoid the tax liability.
Back when we were kids watching Monty Hall on Let’s Make a Deal my smart-ass brother would always say take the “zonk” prize. He figured the price of a camel was more than whatever cash price they were giving away.
So, if they showed that you won a camel, did you actually get to choose to take a camel, even if it was a joke prize? Could you make a big stink if they said, “No, you didn’t win the camel that we showed you.”?
Regarding Let’s Make a Deal, I remember an article about the show in TV Guide, perhaps 30 or 35 years ago. At one point, they hadn’t made it clear that the contestants didn’t actually win the “zonks” or the joke prizes, so when someone won a brick wall, he insisted that the show deliver it to his backyard. After that, they changed the rules to make it clear that contestants didn’t get to keep the zonks.
I’m surprised; after some googling it seems Price is Right does not offer cash equivalents. I know I’ve read that other game shows and contests do offer them, though.
That makes no sense. Why bother going on a show that gives out prizes if you can’t afford the taxes on said prizes. Are they hoping not to win anything?
Perhaps people are hoping to win enough cash (say in a game like Plinko) to cover the taxes on the prizes? Or perhaps people don’t think through the implications of winning?
Keep in mind that it’s also an issue that the prizes are valued at full price. So that trip to Manhattan might be valued at $6,000, with taxes due of perhaps $2,000, but you realize that you could plan a budget trip for less than $2,000.
Many prizes you can easily sell for enough to cover the taxes and a bunch left over. A new vehicle is an obvious example.
Other prizes are not so easy. A first class round trip half way around the world followed by a month stay in the presidential suite at a luxury resort on the other hand…
I often suspect that they jack up the travel prizes on game shows to make sure nobody in their right mind will actually accept them. I don’t know but I suspect they might also make the “services” prizes non-transferable. (You can’t stop somebody from selling their new car, but you can prevent somebody else from taking that luxury vacation.)
Winner reveals inside scoop on game show prizes
In this article, a winner says that for some of the prizes, actually taking the prize was not an option. The winners were given cash-in-lieu. But for other prizes, the only choice was to take the prize or forfeit it. There was no cash alternative.
The article also goes into some background on how prizes are sourced and sponsorship arrangements.
Game-show winner pulls back the curtain on prizes
This article also gives some interesting background on game show prizes.
The linked article above says that the taxes must be paid, before they will release the prizes to you. So, someone with no money would have to borrow money to pay the taxes, then pay it back once they sold the prizes. That sounds like a hassle.
The article says “In the case of The Price is Right, out-of-state contestants like me have to pay California state taxes before accepting any prize.”
That refers to California state income taxes. A non-resident of California who wins a non-cash prize over $1500 has to pay 7% withholding. (7% is deducted from cash prizes.) The actual amount owed will be calculated when the contestant files their California non-resident income tax return at the end of the year and they may get a refund or have to pay extra.
There is no federal withholding on prizes (as opposed to gambling winnings).
Would you really give up a $20,000 car to avoid the hassle of putting $1400 on your credit card until you sold the car?
Not exactly prizes, but… My wife and I went to see The View a few months ago. It was “Must Have Monday” and I knew we were screwed as soon as we walked in - when they found we were from Canada, they would not give us a form to fill out.
Seems any audience gift over $65, attendees must fill out a form with their details - these details are, I assume, passed on to the relevant tax authorities. To simplify the tax implications for foreigners, where the studio I assume would be hit with the bill if we didn’t pay the IRS, the studio simply won’t give foreign guests any gift over $65.
Of course in Canada, gifts are tax-free (as long as it’s not your employer doing the giving).
Gifts are tax-free for the recipient in the U.S., too (very large gifts may require the donor to pay tax). But the IRS doesn’t consider game-show or other prizes to be ‘gifts’; they’re earned income, and taxed accordingly.
I don’t even know 1 person who has $1400 in available credit on a credit card.
What about “everyone in the audience is taking home X?” IIRC the tax implications when Oprah gave away cars were pretty large. Is the audience considered “earning” these gifts?
That’s pretty amazing, but I’ll take your word for it. Then these people probably couldn’t afford to fly to Los Angeles and stay in a hotel for a few days to appear on a game show in the first place. (Remember the California withholding only applies to non-residents of California.)
How can someone earn a prize if they never competed? At least on a game show you compete.
If you win a car in California, and live in New Jersey, do they deliver the car or would you have to take care of getting it delivered to New Jersey? Could you perhaps get it (or something more or less equivalent) from available stock at a local NJ dealership with the sponsor paying for it?
The Q&A I linked to in the third post is with someone who appeared on The Price is Right and lived in Reno. Regarding the car she won, she said, “I had to deal with the Mazda dealer in L.A. He had it shipped to the dealer in Reno, and they give you the car. Then you have to go pay the taxes and the registration on it. It was more like an investment, really.”