What would the taxes be if I won the Saint Jude Dream home contest in West Virginia?

P N: What would the taxes be if I won the Saint Jude Dream home contest in West Virginia?
I think the value on the house is $ 450,000 or you can take a $ 200,000 cash prize instead. I believe the federal gift tax that you would have to pay is 45% of the $ 450,000 = $ 202,500 or $ 90,000 for the cash. My other question is how much would State taxes be? Am I right in thinking I’m not gonna win anything and just be liable for a lot of taxes?
They sold tickets that cost $ 100 each.

Answers and Views:

Answer by Spock (rhp)
the gift tax isn’t what’ll get you — it’s the income tax.

winning a contest or lottery is ordinary income to the extent of the actual cash value of the prize … $ 200,000 in this case.

So, if you win, your income in the year you win will be $ 200,000 hogher than you’d previously been planning.

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gift tax is something that the giver pays, not the person who receives, because the gift is assumed to be a way of evading the inheritance [estate] tax.

BUT — contests and lotteries are not gifts — you have to do something to enter and whatever that is counts as work, effort, or value contributed. And thus, the prizes are taxable income.

Answer by Judy
There would be no gift tax, but there would be income tax. The amount would depend on your other income for the year, your filing status, and a few other things, but would be somewhere around a third of the prize for federal income tax, plus maybe state tax depending on where you live.