a question about some of these sweetstakes .....?

Question

ok lets say i win a brand new car-
i have to pay the taxes , registration and insurance up front correct?
what if some of these poor a$$ people can't afford these costs? how does all that paper work work out i mean in a sense winning a prize which is this large can place a person in debt especially if your young and inexperienced.
the reason i ask is i entered my mother in the hgtv dream house giveaway and when i found out all the taxes and insurance out of pocket you have to pay i was thinking to myself hopefully she doesnt win cause if she does she cant afford to have a close to 2 million dollar house. how do all these big-prize things work out in the long run????
curious....

Answer 1

Generally people sell the prize and use the money to pay the taxes on it.

If you go to HGTV.com and read the blogs from previous winners you will see that HGTV would help her out.

But don't worry about it because I am going to win it! (ha! good luck to your mom)

Answer 2

If you look at the past winners of the dream house sweepstakes, more than 3/4 of the winners never kept the house. They sold the house to pay the taxes resulting from reporting the value of the prize as income.

Same thing with those cars that Oprah gave away on the show. If the winners can't pay the taxes on the car, then they need to sell it.

If you look at the rules of any sweepstakes or game shows, the fine print specifically says that all taxes are the responsibility of the person who won. The sponsor giving out the prize has absolutely no obligation to pay the taxes.

Answer 3

I would guess that what would happen is that whoever wins would have to pay about 1/2 in taxes...thats a mighty big loan. Or maybe it is treated like it has a 0 basis and would be capital gains taxes if you sell it quick. I've had the same though of it I were to win.