I entered a raffle last year in California, where I live, and won a new ,000 custom motorcycle two weeks ago. We do not have a cash option, but probably will sell the bike shortly after picking it up.
How do we pay the taxes on this vehicle? I’ve read that the dealer sends us a 1099 form for our federal tax returns, but what about state income taxes? Is there a similar state form used to declare this vehicle as "income?"
On a ,000 vehicle, how much cash will we have to present to the dealer for other expenses like registration, doc fees, title, etc… in California? Are there any legal loopholes we can use to minimize our tax liability on this prize?
The proceeds of this raffle did go to a bonafide 501(c), non-profit organization.