Prizes are Taxable

You get a tractor! And you get a tractor!  I’m Amy E. Feldman.

Russian President Vladimir Putin received an odd birthday gift from Alexander Lukashenko, the President of Belarus. It was a tractor. Not clear if Putin liked it; he didn’t mention the gift when giving his televised remarks, but maybe he wrote an effusive thank you note: “Dear Alex, Thanks for the tractor. It’s just my size.”

Perhaps he was worried that the tractor would be considered a prize, in which case, if he were in the US, he’d have to pay taxes on it. Gifts are taxable to the donor, not the recipient—but prizes are different, and the winner has to pay taxes on them, based on a percentage of the prize’s fair market value, so somewhat ironically, the bigger the prize, the more it can hurt your pocketbook when you have to pay the taxes, which it why it was reported that some of the winners of Oprah’s car giveaway had to sell the car because they couldn’t afford the six thousand dollars in taxes. As for Putin, I’m going to let his accountant tell him he has to pay taxes.

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