re: Winning a car-tax question

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How did you win it? If you won it at a casino, they should give you a W-2G for the value of the car.

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Not necessarily. If the car was won by winning a bet, then the winner will be issued a W-2G. If the car was the prize in a contest or drawing, then the winner will be issued a 1099-Misc.

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You will claim this amount on your income taxes. When you sell it back to the dealership, your basis in the car is the amount from the W-2G plus the taxes and registration fees to Louisiana. If you sell it for more than that, then you must pay taxes on the gain. However, if you sell it for less than your basis, you can not claim a loss.

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The reason for this is that the casinos have to get approval for contests from the regulators, and the regulators tend to insist the winner actually take title to the car. So the casino reports it in this manner to keep the regulators happy.

However, just because the casino reports it in that fashion doesn't mean you have to. You can make a substance over form argument that your economic benefit from winning is the net cash you receive.