Reportability of Freight and Sales Tax Regarding Prizes and Awards for Non-Employees?

Question

Regarding prizes and awards for non-employees, in determining "Fair Market Value" of a prize (example: ipad), are items such as freight and sales tax included when determining whether it is reportable on Form 1099-MISC in Box 3 under the $600 threshold?

Answer

First let's look at the freight issue as it applies to the determination of "Fair Market Value".

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