Prizes and Awards

Research Scholar Stipend Prize Award Program: How to Report?

Question:

We have the Family Owned Business Institute that has a program called the Research Scholar.  People prepare a proposal that underwent a blind review process.  The winners of the program are awarded a $5,000 "stipend" that is paid out now for the participant to convert the research into a publishable, refereed article with appropriate references to the Family Owned Business Institute.  In addition, they are expected to disseminate the results of the research to members of the business community, students and other constituencies as appropriate through meetings, seminars, publications and the classroom.  Also, the finished paper needs to be turned in for consideration as a prensentation at the 2012 Family Enterprise Research Conference.

Could we consider this as a fellowship type payment or is it more of a prize and treated as a 1099 reportable payment?

Does the decision change if both employees and non employees were awarded stipends?

Answer:
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Sweepstakes Winner and Three Year Car Lease as Award: What Value Do I Report and When?

Question:

One of our television stations will be conducting a sweepstakes in May with a viewer winning a 3 year car lease – see prize description below.  Their question:  So that the winner does not have such a huge tax hit for 2011, is it possible to issue a 1099 each year, prorating this year’s amount, and then dividing the amount for the last 2 years?

One (1) winner will receive a paid 3 year lease on a 2011 car from, retail value $6,084.  Winner must have a valid state drivers’ license, provide proof of insurance, and comply with all other lease terms. Winner is responsible for excise or property tax, MV fees, excess wear and tear, physical damage, maintenance and mileage over 12,000 annually or 36,000 total.

Answer:
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Science Fair Prize Awarded to U.S. High School Student Dependent of a Resident Alien

Question:

We have awarded a science fair prize of $250 to a high school student who is attending high school in the US while her father teaches/works/researches at a local university.  The father files as a resident alien in the US. 

Do we need to report or withhold on the payment to the daughter?  Do we need to get documentation for the daughter and/or the father?  What other information do I need to obtain to consider whether there is a filing or withholding requirement for this prize?

Answer:

We will answer your questio . . .

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University Department Wants to Hold Competition: How do We Report Winnings?

Question:

We have a department at our university who wants to hold a competition, in which there will be an entry fee, and have a committee select the winners who will receive cash prizes/awards and one winner will receive a sewing machine.  Is this reportable on Box 3 of the 1099-MISC or should it be awarded on the 1098-T?  Does the entry fee make any difference in this scenario?

Answer:

This is how you handle such . . .

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Gift Certificates

Question:

My questions relates to tax liability on gift certificates. I work as manager of Accounts Payable for a University. Our student organization has given out several gift certificates for Bowling and/or Billiard Party at the University Student Union Games Center. The value of the gift certificates is $200. The Games Center is donating the bowling lane fees and bowling balls and shoe fees for up to 18 people. There is no cost to the University for this part of the gift. In addition, the gift certificate covers the cost of Pizza that is served by our University Food Service. The cost of Pizza is $75. Question: Should we track this for 1099 reporting? Is there a tax liability to the recipient of the gift certificate? Is the tax liability just on the amount of the Pizza (cost to the University), or is it the total value of the gift certificate? Thank you for your help.

Answer:

Quite a few things come int . . .

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