I just won a gourmet dinner for 12 in a charitable lottery. It will be prepared personally by a world famous chef in his own home. The charity says it’s worth $13,000. Isn’t that great?
That depends on how much you are willing to pay to host your friends. The charity is required to file a Form W-2G with the IRS to report a lottery prize of more than $600, and you get to pay income tax on the value — less the cost of the ticket, of course. In your 35% tax bracket, that’s more than $4500. Is that great?