(no subject)
Jun. 4th, 2005 05:37 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
theducksThis is shocking..
In March I entered a contest sponsored by American Airlines entitled “Why You Fly” in which entrants were required to create videos, photos, or writing telling a story as to why they fly. My entry won the grand prize in the video category. The prize consisted of twelve flights for two people from any American to city to any worldwide destination that American Airlines services. The flight vouchers would have to be used within one year or forfeited. Upon my notification of the prize, I was very excited, as my wife and I love to travel, and have done so frequently on American Airlines. I had worked hard creating my video entry, and I felt that my work had been justly rewarded.
However, when I received the winner’s package, I noticed some fine print that indicated that I would be issued a 1099 form for the “full retail value” of the prize, and that I would be required to pay all federal, state, and local taxes on that value. This concerned me greatly as American Airlines had indicated that the retail value of this prize was $52,800. I spoke to my tax accountant and a representative of the company, Shamrock Industries, that organized the contest, and confirmed that I would have to pay tax on $52,800 as if it were income that I had received.
I was shocked, to say the least. I did the math, and determined that my tax liability on this prize, between federal, state, and local taxes, would be somewhere between $15,000 and $23,000, depending on my other income for the coming year. I know it’s the law that taxes must be paid on winnings, and this certainly makes sense where winnings are in cash, or are items that can be sold if necessary to cover the taxes. However, in this case, I would not be able to sell the flight vouchers, and even if I was, I can’t imagine anyone who would be willing to pay $2200 for a restricted economy ticket. Yet this is what American Airlines has valued each flight voucher at.
How do companies think they can get away with this sort of crap? Poor guy.
In March I entered a contest sponsored by American Airlines entitled “Why You Fly” in which entrants were required to create videos, photos, or writing telling a story as to why they fly. My entry won the grand prize in the video category. The prize consisted of twelve flights for two people from any American to city to any worldwide destination that American Airlines services. The flight vouchers would have to be used within one year or forfeited. Upon my notification of the prize, I was very excited, as my wife and I love to travel, and have done so frequently on American Airlines. I had worked hard creating my video entry, and I felt that my work had been justly rewarded.
However, when I received the winner’s package, I noticed some fine print that indicated that I would be issued a 1099 form for the “full retail value” of the prize, and that I would be required to pay all federal, state, and local taxes on that value. This concerned me greatly as American Airlines had indicated that the retail value of this prize was $52,800. I spoke to my tax accountant and a representative of the company, Shamrock Industries, that organized the contest, and confirmed that I would have to pay tax on $52,800 as if it were income that I had received.
I was shocked, to say the least. I did the math, and determined that my tax liability on this prize, between federal, state, and local taxes, would be somewhere between $15,000 and $23,000, depending on my other income for the coming year. I know it’s the law that taxes must be paid on winnings, and this certainly makes sense where winnings are in cash, or are items that can be sold if necessary to cover the taxes. However, in this case, I would not be able to sell the flight vouchers, and even if I was, I can’t imagine anyone who would be willing to pay $2200 for a restricted economy ticket. Yet this is what American Airlines has valued each flight voucher at.
How do companies think they can get away with this sort of crap? Poor guy.
