Taxes Forced 2005 Sweepstakes Winner To Forfeit Prize
It may be a bit early for a story about taxes -- if you're like
us, you're in a state of denial right up to April 14. No matter
what your tax bill this year may be, though, it still won't be as
bad as the story of Brian Emmett... who was forced to give up a
once-in-a-lifetime opportunity to fulfill his childhood dream to
fly into space.
Why? Well, there is really no other way to say it... because of
the IRS.
The Associated Press reports Emmett won a ticket into space in a
2005 sweepstakes by Oracle Corp. He answered a series of questions
online about Java computer code to win the prize, a seat on a
future commercial spaceflight. The prize was valued at $138,000 --
a bargain, compared to today's price of over $250,000.
At first, it was a dream come true for the space buff -- the
payoff for years of watching shuttle launches, and attending space
camp. But then reality set in... as Emmett realized he would be on
the hook for $25,000 in taxes.
As with any large reward -- and as many a lottery, sweepstakes,
and gameshow-winner have also realized -- winnings are reported to
the Internal Revenue Service as income. And that means winners are
responsible for the income taxes on their winnings.
Emmett, a 31-year-old software consultant from the San Francisco
area, gave up his seat to avoid paying the bill.
"There was definitely a period of mourning. I was totally
crestfallen," Emmett said. "Everything you had hoped for as a kid
sort of evaporates in front of you."
Oracle was one of the first companies to dangle a commercial
spaceflight before prize hopefuls. Two years later -- with the dawn
of commercial spaceflight moving ever-closer -- more and more
companies are offering rides into space aboard such vehicles as
Virgin Galactic's SpaceShipTwo, when they begin flights sometime in
2009.
As Aero-News reported, even
Microsoft has gotten into the act, offering a seat on Rocketplane
Limited's LearJet-based space vehicle as the grand prize in its
intricate 'Vanishing Point" promotion for the Vista operating
system.
In Microsoft's case, group marketing manager Brian Marr
says a $50,000 check that comes with the $253,500 prize should
cover the winner's taxes. But winners of other contests may not be
as fortunate.
"From a consumer perspective ... I'd be wary," said Kathleen
Allen, director of the University of Southern California's Marshall
Center for Technology Commercialization. "I'd check to see the fine
print."
Greg Jenner, of the American Bar Association, says winners can
help ease the financial burden by arguing they don't owe the taxes
until the flight actually lifts off. Or, one could work out an
installment plan to pay the tax.
But either way... you'll still have to pay eventually. Which
means if you couldn't afford a ride into space at face value... you
may not be able to afford a "free" ticket just yet, either.