Winning a church raffle

Discussion in 'Tax' started by Manos, Sep 28, 2004.

  1. Manos

    Manos Guest

    If someone wins a church raffle of which each ticket to
    enter the raffle costs $100.00 , which part does the winner
    pay taxes on, the price of the ticket or the winnings?. If
    it sounds like stupid question forgive me but I have been
    hearing some wacky things from different people.

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    Manos, Sep 28, 2004
    #1
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  2. Manos wrote:

    > If someone wins a church raffle of which each ticket to
    > enter the raffle costs $100.00 , which part does the winner
    > pay taxes on, the price of the ticket or the winnings?. If
    > it sounds like stupid question forgive me but I have been
    > hearing some wacky things from different people.


    In general you'd pay tax on the winnings less the cost of
    the ticket.

    Stu

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    Stuart Bronstein, Oct 2, 2004
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  3. > If someone wins a church raffle of which each ticket to
    > enter the raffle costs $100.00 , which part does the winner
    > pay taxes on, the price of the ticket or the winnings?. If
    > it sounds like stupid question forgive me but I have been
    > hearing some wacky things from different people.


    Raffle tickets are not deductible as contributions. A
    purchase is a gambling wager. If you win you may deduct all
    of your gambling losses (costs of tickets, etc) from your
    gambling winnings but, in no case are you permitted to
    deduct more than you've won.

    The winnings are reported on line 21 of your tax return.
    Only if you are able to itemize on Schedule A (Form 1040)
    "Itemized Deductions" will you be able to benefit from using
    your gambling losses as deductions.

    "Jack" - John H. Fisher -
    Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
    My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

    Where Ignorance is bliss, 'tis folly to be wise!=:)

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    John H. Fisher, Oct 2, 2004
    #3
  4. Manos wrote:

    > If someone wins a church raffle of which each ticket to
    > enter the raffle costs $100.00 , which part does the winner
    > pay taxes on, the price of the ticket or the winnings?. If
    > it sounds like stupid question forgive me but I have been
    > hearing some wacky things from different people.


    There's a minor dispute going on in misc.taxes about this.
    The concensus among those who have some idea what taxes are
    (noting the existance of Dale) is either:

    1. The winnings less $100 are gambling income, reported on
    Form 1040 line 21(?), miscellaneous income. Any additional
    losing tickets are gambling losses, reported to the extent
    of gambling winnings in Form 1040 Schedule A line 27(?),
    miscellaneous deductions not subject to the 2% limit.

    2. The winnings are gambling winnings, reported as in
    possibility 1. All tickets are gambling losses, reported as
    in possibility 1.

    I side with 1. The other Art in this group sides with 2. If
    the church gives you a 1099, then you pretty much have to
    report that amount as gambling winnings.

    I think even Art would agree that, if the true fair market
    value of the prize is less than $100, the difference is a
    gambling loss, even if the church DOES give you a 1099.

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    Arthur L. Rubin, Oct 2, 2004
    #4
  5. Manos

    MAT1040X Guest

    > If someone wins a church raffle of which each ticket to
    > enter the raffle costs $100.00 , which part does the winner
    > pay taxes on, the price of the ticket or the winnings?. If
    > it sounds like stupid question forgive me but I have been
    > hearing some wacky things from different people.


    The value of the winnings is taxable. The cost of the
    raffle ticket can be claimed as gambling losses on Schedule
    A in an amount not greater than the winnings.

    Mary Ann Thomas, EA in AZ

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    MAT1040X, Oct 2, 2004
    #5
  6. "Manos" <> wrote:

    > If someone wins a church raffle of which each ticket to
    > enter the raffle costs $100.00 , which part does the winner
    > pay taxes on, the price of the ticket or the winnings?. If
    > it sounds like stupid question forgive me but I have been
    > hearing some wacky things from different people.


    Raffles = Gambling - it matters not that the event was
    sponsored by a church, it is gambling just the same.

    Gambling losses are deductible to the extent of gambling
    winnings AND you get to aggregate gambling losses from all
    gambling activities to offset gambling income from one
    activity. For example, if you like Blackjack and the Slots
    and you win $50,000 playing Blackjack but lose $50,000
    playing slots you have both $50,000 of gambling income AND
    $50,000 of gambling losses.

    In your example, the winner will have gambling income for
    the Fair Market Value of the prize and the gambling losses
    will include, but are not limited to, the cost of the raffle
    ticket. You should total up all of the gambling losses -
    all the losing lottery tickets, all the fees and costs of
    playing church BINGO.

    Gene E. Utterback, EA

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    Gene E. Utterback, EA, Oct 2, 2004
    #6
  7. Manos

    A.G. Kalman Guest

    Manos wrote:

    > If someone wins a church raffle of which each ticket to
    > enter the raffle costs $100.00 , which part does the winner
    > pay taxes on, the price of the ticket or the winnings?. If
    > it sounds like stupid question forgive me but I have been
    > hearing some wacky things from different people.


    I've the read the replies to this post and have a problem
    with any response that allows the cost of the winning ticket
    to be deducted as a gambling loss. In addition, I have a
    problem with any response that says you can deduct the cost
    of the ticket from the raffle prize and only declare the net
    amount as income.

    First: I don't see how one can deduct the cost of the
    winning ticket as the taxpayer did not sustain a gambling
    loss.

    Second: I find nothing in the law that says you can net the
    cost of the raffle ticket. A raffle is not like a bet at a
    sports book or race track. In those environs, the payoff
    includes your winnings and the return of your wager.
    Therefore, an even money bet on a football game for $100,
    would return the bettor $100 of taxable income and a return
    of the $100 bet.

    I must conclude that the cost of the winning raffle ticket
    is a nondeductible personal expenditure. Naturally, the
    cost of any losing raffle tickets may be included with other
    gambling losses to offset winnings if the person itemizes.

    --
    Alan
    http://taxtopics.net

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    A.G. Kalman, Oct 8, 2004
    #7
  8. A.G. Kalman wrote:

    > Second: I find nothing in the law that says you can net the
    > cost of the raffle ticket. A raffle is not like a bet at a
    > sports book or race track.


    How is a raffle signifcantly different than poker? Or are
    claiming that the stakes in a poker game are personal
    expenses?

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    Arthur L. Rubin, Oct 11, 2004
    #8
  9. Manos

    A.G. Kalman Guest

    Arthur L. Rubin wrote:
    > A.G. Kalman wrote:


    >> Second: I find nothing in the law that says you can net the
    >> cost of the raffle ticket. A raffle is not like a bet at a
    >> sports book or race track.


    > How is a raffle signifcantly different than poker? Or are
    > claiming that the stakes in a poker game are personal
    > expenses?


    In poker, the money you put into the pot is returned to you
    just like a bet on a horse. When you win a car in a raffle,
    no one has returned to you your cost of the raffle ticket.

    --
    Alan
    http://taxtopics.net

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    A.G. Kalman, Oct 14, 2004
    #9
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