Professor vanessa lazo received a free tour to costa rica in a drawing at a professional conference. Professor lazo has asked for your help in determining whether the free tour that she received is taxable. She understands that prizes and awards are taxable income to the recipient, but she does not think the free tour qualifies as a prize or award and is, therefore, not taxable.

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19-09-2018
Business

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Professor vanessa lazo received a free tour to costa rica in a drawing at a professional conference. Professor lazo has asked for your help in determining whether the free tour that she received is taxable. She understands that prizes and awards are taxable income to the recipient, but she does not think the free tour qualifies as a prize or award and is, therefore, not taxable.

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Rupicapra Rupicapra · Answer 1 · 2018-10-01T09:02:12+02:00

Answer: The fair market value of the free tour to Costa Rica is a taxable income.

Professor Vanessa Lazlo won the free tour in a draw, where a prize is awarded by chance.

Publication 525 of the IRS defines taxable and non taxable income.

The IRS lists winnings from raffles and lotteries under Other income.

It also declares that the fair market value of winnings from raffles and lotteries are winnings from gambling. Hence the fair market values of non cash prizes are taxable and must be included as income.