Your chance to enter and win a contest to eat a meal with Mitt Romney and Donald Trump has sadly ended, but if you forgot to enter, you can at least rejoice that you'll avoid paying taxes on the value of the winnings.
Indeed, both Romney and Barack Obama are touting mealtime giveaways this campaign, and if you look at the small type in the contest rules, winners are held accountable for paying taxes on the value of their prize. Legal Insurrection's William Jacobson noted this week that the rules for Dinner with Barack include a disclaimer reading, "All federal, state and local taxes associated with the receipt or use of any prize are the sole responsibility of winner." And the IRS notes that "If you win a prize in a lucky number drawing, television or radio quiz program, beauty contest, or other event, you must include it in your income." The campaign breaks down estimated value of their prize: transportation to the event (estimated at $1,200), a night in a hotel ($200), dinner with Obama ($200), all adding up to about $1,600. TaxProf Blog's Paul Caron notes that at a 35 percent tax rate, that comes out to $560 of extra taxes on your increased "income."
The Romney campaign provides similar estimates for their big dinner. A meal with the Donald includes an estimated $750 of airfare, a hotel stay at the Trump International Hotel & Tower in New York at $700, ground transit at about $200, and a $50 meal. This comes out to $1,750, which by the 35 percent tax bracket logic, makes for a $612.50 tax bill. The Romney campaign's rules note that, "The value of the Prize may be taxable as income under federal, state, or local laws, and the winner will receive an IRS 1099 Form for the value of the Prize." Tasty!