Raffle aircraft and tax question

AggieMike88

AggieMike88

Touchdown! Greaser!
Joined
Jan 13, 2010
Messages
20,805
Location
Denton, TX
Display Name
Display name:
The original "I don't know it all" of aviation.
Say I won one of the aircraft being raffled out there. And say it was something like the 1966 C172 that the Hangar Museum is selling, so the estimated value was in the $40,000 range.

I'm pretty sure that if I won it, I need to pay some taxes to the IRS. Whatever type and amount, I do that.

But if I was to later sell that same aircraft, do I owe more taxes to the IRS? If yes, what type and roughly what amount?
 
Your "win" should be taxed, probably at your usual tax rate, unless of course the Fair Market Value of the plane pushes you up a bracket. (But you're a pilot so there are no higher brackets ?!?)

Depending on how you hold it, it is a state tax issue who may be taxed on a future sale. The "revenue" of you selling it is not income, because you are a casual seller. Just as there may be profit in other personal property you buy and sell, and that is non-taxable. (Think boat or car)

The exception to all this is Real Estate. Since it has a tax preference for the purchase and holding, the gains have a bunch of rules.

Anyway, there's the non-cpa view of it. We'll see how that view holds up soon enough.
 
1) Yes, it's typically a taxable event as ordinary income. Basically, you're going to add the value of the aircraft to your normal AGI, calculate the tax owed at that rate.

2) If you sell the aircraft for more than the $40,000.00 you've already paid income tax on, you probably owe tax on the difference.

Disclaimer: I'm not a CPA or tax professional.
 
And the best part of any "winnings" being taxed as Ordinary Income is that winning anything signifiant can potentially bump you up to the next tax bracket due to your now higher "income" and you now owe even more on everything you made!

...yay IRS...
 
a) sales tax on FMV. Whats FMV? Get an appraisal of trade in - use that - it what its worth tomorrow - not in 3 months after you try to sell it.

b) Sales tax. Maybe. Depends on your state and how greedy that are.

c) State and local sales tax on FMV - probably. unless your state / local has an exemption for charitable raffle wins - some do.

d) Then - personal property tax.

but no -if the wins bumps you into a higher bracket you only pay tax on the income above the level in the higher bracket - not on everything - really @Shawn - is that that you do your taxes?
 
comanchepilot said:
but no -if the wins bumps you into a higher bracket you only pay tax on the income above the level in the higher bracket - not on everything - really @Shawn - is that that you do your taxes?
Click to expand...

...sorry, I'm too poor to be able to experience those higher tax brackets...now excuse me while I go buy some Surf and Turf on my WIC card for lunch...

pfft...payin taxes is for sukers.
 
Last edited:
If you're just going to flip it, I wouldn't bother registering it to you, guess it all depends on what forms the place you won it from makes you fill out
 
I think it's the same as a game show. You pay the tax on the WIN and then you can dispose of the items in any way you choose without tax impact.

Where... are... the... tax... accountants... of... America... when we need them?
 
If the airplane is being advertised as $40,000 Fair Market Value (FMV), it may be difficult to argue otherwise (unless you immediately sold it for a lesser amount.) You would include that FMV as Ordinary Income on your Federal Tax Return. You may also need to include it as income for state tax purposes. Depends on the state. If Sales Tax, Personal Property Tax, etc are relevant to the your resident state, you would also pay tax based on the FMV.

The FMV that is included as Federal Taxable income would be added to your basis. When the airplane is sold, if the selling price is higher than basis, you have a gain, if lower, you have a loss. The manner in which you hold that asset would dictate whether the loss would be deductible. That would also dictate the type of tax (capital gain or ordinary) the gain would be subject to.

JD

Disclaimer: The above is not to be considered tax advice, but merely one person's opinion on a generic scenario. Consult your tax advisor to see how you would be effected.
 
SkyDog58 said:
I seem to recall someone attacking him pretty hard on here though I forget the issue and who it was. Personally, I liked Arthur.
Click to expand...
somebody attacking another poster on POA? tell me it isn't true...
 
I had to pay both federal and state tax when I won mine. Had to sell my old airplane to do it, too.
 
You must log in or register to reply here.
Back
Top