Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Will Sony Stick It to Me?

So, I made it. I'm one of the 10,000 finalists for The Da Vinci Code Quest online puzzle game. At least six other Fools as obsessed as I also made the final cut, and we're all due to compete in a five-puzzle showdown that begins Friday for a grand prize estimated to be worth $128,170.54.

Therein lies my problem. Much as I want to win the four first-class trips for four to Rome, London, Paris, and New York and the attendant Sony gadgets that comprise the swag for the big winner, I'm loath to deal with the tax consequences. They could be huge. Sony says so in the contest rules:

All federal, state, or other tax liabilities arising from. the Contest will be the sole responsibility of Finalists and the Grand Prize winner. Grand Prize winner will receive an IRS Form 1099 from the Sponsor for the total ARV (approximate retail value) of the Grand Prize and the Finalist Prize stated above that he/she won in the calendar year won. (Emphasis mine.)

In other words, unless you want to add $128,170.54 to your adjusted gross income when you file your 2006 tax return, don't bother trying for the big prize.

And it gets worse. Sony doesn't want winners to sell one or more of their items to offset a big tax bill. Smaller ticket items, such as a high-definition flat panel display and a VAIO notebook computer, could potentially be sold for cash, but probably not for anywhere near full retail. I doubt either would provide enough to cover the IRS' cut.

That's why I called the Feds looking for help this morning. Their advice was to download this publication (links to a pdf file) and read page 31. It says, in effect, that the winner can include his own estimate of fair value of the grand prize in filing his return. "Fair value" is equal to the price at which a seller and a buyer can agree to a transaction, which means comparable sales from eBay or Amazon may qualify. But if the winner's estimated fair value materially differs from what Sony sends the IRS in its 1099, it could trigger questions and a request for documentation. (Gulp.)

I'm still thrilled to be one of the final 10,000 in The Da Vinci Code Quest. The games have been fun, and the final challenge should be really engaging. But the price of being first demands more treasure than I had bargained for. Da Vinci Code author Dan Brown may have sold 65 million books, but I haven't. Yet.

eBay and Amazon are both Motley Fool Stock Advisor picks. Take the newsletter for a30-day free spin.

Money matters keeping you up at night? Take afree trial to the Motley Fool Money Advisor service. We'll help you get your finances in order and give you helpful information on future planning.

We're also offering anexclusive teleseminarwith Motley Fool co-founders David and Tom Gardner. They'll tell you when tobuy and sellstocks in this uncertain market.

Fool contributorTim Beyersthinks the Da Vinci Code is an addictive piece of fiction. And, yes, he will go see the movie if he gets a chance. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out which stocks he owns by checking Tim's Foolprofile. The Motley Fool has an ironcladdisclosure policy.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 513669, ~/Articles/ArticleHandler.aspx, 10/21/2016 8:20:59 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes