Keysight 6000X 6Ghz Voting Is Live vote for Carlos A.

[Fohdeesha]

It was stated somewhere that she was in fact 18, but as others have stated for some reason I doubt she has 20k lying around to cover the tax bill

[Macbeth]

I would estimate 25 considering she completed a 5 year degree 2 years ago. https://www.linkedin.com/in/nilu-jariwala-6893bb33.

But the resume doesn't indicate that 'USA sur-prize! income tax' bill being paid easily 

[rsjsouza]

Well, FWIW anyone in the US will have trouble paying taxes over such high priced piece of equipment. In any case, the leading contestant (as far as we know, Nilu) may simply have the money in the bank, benefit from some specific student/scientific tax break or even do a donation to her school. So far we can only speculate...

[ez24]

Well, FWIW anyone in the US will have trouble paying taxes over such high priced piece of equipment. In any case, the leading contestant (as far as we know, Nilu) may simply have the money in the bank, benefit from some specific student/scientific tax break or even do a donation to her school. So far we can only speculate...

Or sell it and use some of the money to pay the taxes that will be due next year.  I think this is what most people would do.

[rx8pilot]

From what I understand (so far) is that at least some of it has to be paid up-front - possibly all of it. Not just declared and paid later. Don't know for sure since a lot of the info I have found appears to be someones opinion as opposed to a clear black and white rule.

[nctnico]

From what I understand (so far) is that at least some of it has to be paid up-front - possibly all of it. Not just declared and paid later. Don't know for sure since a lot of the info I have found appears to be someones opinion as opposed to a clear black and white rule.

I'd seek advice from a lawyer specialised in taxes and not look on internet or ask a book keeper if you must be sure.

[rx8pilot]

From what I understand (so far) is that at least some of it has to be paid up-front - possibly all of it. Not just declared and paid later. Don't know for sure since a lot of the info I have found appears to be someones opinion as opposed to a clear black and white rule.

I'd seek advice from a lawyer specialised in taxes and not look on internet or ask a book keeper if you must be sure.

My wife is a CPA that specializes in taxes - all she does is taxes and tax planning every day for high net worth individuals and small/med businesses. She is still trying to figure it out. The nature of the tax code is that there are seemingly endless tiny and obscure rules/exceptions based on many factors. When it is a strange or unusual case, it requires research to get the answer that is strong enough to hold up against the state or feds.

[edavid]

My wife is a CPA that specializes in taxes - all she does is taxes and tax planning every day for high net worth individuals and small/med businesses. She is still trying to figure it out. The nature of the tax code is that there are seemingly endless tiny and obscure rules/exceptions based on many factors. When it is a strange or unusual case, it requires research to get the answer that is strong enough to hold up against the state or feds.

I don't get it... as long as you make your US and state Required Annual Payments, what is the problem?  What is strange or unusual about receiving a prize in a contest?

[nctnico]

From what I understand (so far) is that at least some of it has to be paid up-front - possibly all of it. Not just declared and paid later. Don't know for sure since a lot of the info I have found appears to be someones opinion as opposed to a clear black and white rule.

I'd seek advice from a lawyer specialised in taxes and not look on internet or ask a book keeper if you must be sure.

My wife is a CPA that specializes in taxes - all she does is taxes and tax planning every day for high net worth individuals and small/med businesses. She is still trying to figure it out. The nature of the tax code is that there are seemingly endless tiny and obscure rules/exceptions based on many factors. When it is a strange or unusual case, it requires research to get the answer that is strong enough to hold up against the state or feds.

With all due respect: the worst thing a business owner can do is ask a book keeper or accountant for legal advice! I've seen it go wrong too many times and yes that has everything to do with obscure rules/exceptions based on many factors. A lawyer is trained to interpret these and has hands on experience on how these are interpreted by the tax collection department and courts. I know a lawyer is expensive but OTOH he/she doesn't need to spend many hours to figure out what is what.

[rx8pilot]

With all due respect: the worst thing a business owner can do is ask a book keeper or accountant for legal advice! I've seen it go wrong too many times and yes that has everything to do with obscure rules/exceptions based on many factors. A lawyer is trained to interpret these and has hands on experience on how these are interpreted by the tax collection department and courts. I know a lawyer is expensive but OTOH he/she doesn't need to spend many hours to figure out what is what.

I have started/owned/sold small businesses for 20+ years. I would never ask a lawyer for tax advice, only advice on issues about business structure and other legal matters. I talk to someone that that is a registered agent of the IRS and has spent years studying, interpreting, and defending on tax related issues. If I was being investigated for fraud and going to trial - I would hire an attorney who would probably hire a tax professional. This matter is far more simple and not even close to justified in paying $500/hr for an attorney to guess their way through the answer.

I don't get it... as long as you make your US and state Required Annual Payments, what is the problem?  What is strange or unusual about receiving a prize in a contest?

The tax payments most people make are withheld from paychecks automatically so the govt' has the cash up front. You may reconcile all your deductions at the end of the year and possibly get some back, none at all, or be asked to pay even more. If a cash prize is won it is considered regular income and taxes are taken off the top and you get the rest. For non-cash prizes, the MSRP of the prize is considered cash revenue that is taxable and the recipient has to pay cash for the prize. In California where we have a lot of TV game shows, contestants regularly win high value non-cash prizes that that they are asked to pay taxes in cash up front before the prize is released. If they also won cash, that can be used, but if they only won a car - they may have to pay a whole bunch of cash or forfeit the win.

The question outstanding is if the winner here will be required to pay in cash up-front or if they simply declare the income and pay up a year from now. The answer is not clear yet. The individual states have their own laws that vary. For example, if a California resident wins on a game show, they simply declare the value of the win and pay at the next tax year deadline. If an out of state person wins, California asks for cash-up-front I think as if you came to the state and got a job for one day. Nuts.

It really sucks if you win a high-value prize that is usually sold for much less than the MSRP - like Chevrolet cars where a typical sales price is much less than the window sticker price.

[DimitriP]

-Honey, this guy on the internet is making a good point. We should ask a lawyer since you are only a CPA.

- (yeah...fill in the blank, here)

[nctnico]

With all due respect: the worst thing a business owner can do is ask a book keeper or accountant for legal advice! I've seen it go wrong too many times and yes that has everything to do with obscure rules/exceptions based on many factors. A lawyer is trained to interpret these and has hands on experience on how these are interpreted by the tax collection department and courts. I know a lawyer is expensive but OTOH he/she doesn't need to spend many hours to figure out what is what.

I have started/owned/sold small businesses for 20+ years. I would never ask a lawyer for tax advice, only advice on issues about business structure and other legal matters. I talk to someone that that is a registered agent of the IRS and has spent years studying, interpreting, and defending on tax related issues.

Over here we call such a person a tax-lawyer or tax specialist (which usually went to law school) so don't pin me on the semantics here (English is not my native language). Just giving you a friendly warning because I have seen long time business owners making costly mistakes by getting the wrong advice.

[rx8pilot]

Over here we call such a person a tax-lawyer or tax specialist (which usually went to law school) so don't pin me on the semantics here (English is not my native language). Just giving you a friendly warning because I have seen long time business owners making costly mistakes by getting the wrong advice.

It was taken as friendly advice. The good news on this one is that the only question is 'WHEN' it gets paid as opposed to the more complicated and legally risky question of 'should I pay' or 'how much do I pay'. I would expect that Keysight will have to decide when they are ok with releasing the prize based on the various paperwork and/or tax payments are reasonable. There is no real legal hurdle to speak of. My main curiosity is what happens if any of the contestants are asked to fork over $20k before the prize is released. If the cash is not required up front, it is vastly easier to accept it and sell it before the next tax year is due (363 days from now).

[edavid]

My main curiosity is what happens if any of the contestants are asked to fork over $20k before the prize is released. If the cash is not required up front, it is vastly easier to accept it and sell it before the next tax year is due (363 days from now).

How would that happen?  Keysight is not required (or allowed) to collect income tax... their only duty is to issue a 1099 by next January.

[rx8pilot]

Honestly, I am not sure how it works or if a 1099 is all they need. The prizes won at game shows in CA are state taxed in cash on the spot but I think the federal tax is 1099. In state winners can pay later, but out of state winners have to pay CA state tax in cash before the prize is awarded - its like a payroll withholding. I do not have any answers myself, only guessing based on what I have read so far. My wife is only modestly engaged since I have not won anything AND tomorrow is the tax deadline day. This time of the year is 7 days/week of non-stop tax action and she is not up for any hypothetical questions at all.

I am left to guess on something I know nothing about except for the marginally trustworthy information I have found on the internet.

[forrestc]

Honestly, I am not sure how it works or if a 1099 is all they need. The prizes won at game shows in CA are state taxed in cash on the spot but I think the federal tax is 1099. In state winners can pay later, but out of state winners have to pay CA state tax in cash before the prize is awarded - its like a payroll withholding. I do not have any answers myself, only guessing based on what I have read so far. My wife is only modestly engaged since I have not won anything AND tomorrow is the tax deadline day. This time of the year is 7 days/week of non-stop tax action and she is not up for any hypothetical questions at all.

I am left to guess on something I know nothing about except for the marginally trustworthy information I have found on the internet.

There's another possibility here... if the prize is given to a business I suspect there is a completely different set of rules here....  specifically because if I had gone out and purchased said scope, it would be deductible as a business expense (perhaps over several years - i.e. depreciation).   

Let's assume that the prize was cash given to a business.  In which case, the prize would be subject to taxation as income.  If that cash was used for deductable expenses, all of a sudden there are no taxes due. 

I'd imagine (but don't know for sure), that this would apply the same way....  The taxable amount would be the MSRP of the prize, minus the deductable amount of the MSRP of the prize, which would make the taxes effectively zero for a business receiving an item which would normally be deductible if they purchased it. 

If I was to receive (and keep) the same prize as an individual, I most likely would have to pay taxes on the amount.

[Brumby]

There's another possibility here... if the prize is given to a business I suspect there is a completely different set of rules here....  specifically because if I had gone out and purchased said scope, it would be deductible as a business expense (perhaps over several years - i.e. depreciation).   

Let's assume that the prize was cash given to a business.  In which case, the prize would be subject to taxation as income.  If that cash was used for deductable expenses, all of a sudden there are no taxes due.

Interesting argument, but I'm concerned about one fundamental factor - the period over which such a deduction can be taken.  I'm no tax expert, but as I understand things, if the value can be taken as a capital expense in the one tax year, then you might be OK - but if it has to be depreciated over a number of years, then you could be up for a bill up front (but will be recouped over the depreciation period).

[Towger]

How would selling it work?

MSRP $70k.  It would hard to get anywhere near that on the second hand market.  Any large company who needs a 6Ghz scope would just buy a new one.  The red tape involved in buying any equipment, 2nd hand off a private individual would make a purchase almost impossible.  In addition, we are still not 100% sure on the warranty situation.  That just leaves the one man, small and medium size companies, where 'the boss' can make the purchasing decisions.

So, how much is a $70K 2nd hand scope worth?  The options are sell it directly to a company or if stuck sell it to a dealer, who in addition will want their cut.

Once sold, are there taxes on the money received and can they be off set against the initial prize tax?

In Ireland (and probably most of Europe) there is no tax on prizes, but there is tax on Capital Gains CGT. Here this is currently 33% with the first 1,270 exempt per year.  Fine if you want to keep the scope, but selling it will cost you.

[forrestc]

There's another possibility here... if the prize is given to a business I suspect there is a completely different set of rules here....  specifically because if I had gone out and purchased said scope, it would be deductible as a business expense (perhaps over several years - i.e. depreciation).   

Let's assume that the prize was cash given to a business.  In which case, the prize would be subject to taxation as income.  If that cash was used for deductable expenses, all of a sudden there are no taxes due.

Interesting argument, but I'm concerned about one fundamental factor - the period over which such a deduction can be taken.  I'm no tax expert, but as I understand things, if the value can be taken as a capital expense in the one tax year, then you might be OK - but if it has to be depreciated over a number of years, then you could be up for a bill up front (but will be recouped over the depreciation period).

Yes,  that's the way it works.  It's the same for a business buying any large capitalized equipment.   Which is real fun when you have to pay taxes on the income you just spent buying the large piece of equipment.  This is why many companies lease their large equipment.

BUT,  section 179 rules allow you to deduct a certain total (500k right now) of capital expenses in the first year.   So you get to expense your first 500k immediately.. for those items which are eligible.

Of course whether this applies to a prize is the question here.

Sent from my SM-N900V using Tapatalk

[kaz911]

I have started/owned/sold small businesses for 20+ years. I would never ask a lawyer for tax advice, only advice on issues about business structure and other legal matters. I talk to someone that that is a registered agent of the IRS and has spent years studying, interpreting, and defending on tax related issues. If I was being investigated for fraud and going to trial - I would hire an attorney who would probably hire a tax professional. This matter is far more simple and not even close to justified in paying $500/hr for an attorney to guess their way through the answer.

There are both Tax Lawyers and Tax accountants. The difference is not huge. But in general a tax lawyer might have a (slightly) better understanding of the law behind - giving you more options you can then feed to your tax accountant. Tax accountants are usually more "do what we are used too" unless you show them otherwise in Black & White.

My better half is both - and her team(s) are usually a mix of both professions. But she works only for big investment companies - so our personal tax things we take to a local personal tax accountant - but who also have tax lawyers in their team. Tax has become so darn complex world wide.... but it keeps the butter on the bread for those working in that field... So I'm certain anyone in those fields will not be out of a job for the next many years if they are just reasonably smart.

[Augustus]

How would selling it work?

SebW went nuts on the very same question 

OTOH, David may offer Carlos an interesting deal 

[Macbeth]

From what I can see all 3 of the "Popularity Contestants" are all USA based. Only Carlos is in business. So this should be an easy transaction for Keysight if they weed out the cheats / 'cash for votes' dubious contestants

However, there is nothing other than time/effort/cost stopping anyone from setting up in business on their own account - I mean, USA is the land of the free and all that. Which makes me puzzled about this gift/prize tax? Whatever cost the bureaucracy is, it's a lot less than any income tax on $70k I am sure!

Now AFAIK a UK business that happens to obtain any item that could be capital equipment or expensed equipment only has to book its actual cost to the business, not some fanciful notional cost. Then the VAT, if any paid, would be reclaimed in that quarter.

Depreciation will be done by the usual straight line or reducing balance accounting rules in the books, but the HMRC ignore that and use their own Capital Allowances, which are generally 25% each tax year - but there are often business friendly schemes like 100% first year allowance for certain small businesses, etc.

I have to admit this whole paying income tax on free prizes USA thing seems utterly wrong to those of us in Europe. Ok, there is the VAT thing which is Customs & Excise on imports only. But that again would be 100% refunded to a business. Hence why having a Keysight distributor send the goods to the winner is the way to go, at no real cost to Keysight, distributor, or individual winner.

I really don't understand why the IRS/HMRC seem to feel they deserve a penny out of the whole scheme? It goes against natural justice and double taxation.

[ChunkyPastaSauce]

How would selling it work?

MSRP $70k.  It would hard to get anywhere near that on the second hand market.  Any large company who needs a 6Ghz scope would just buy a new one.  The red tape involved in buying any equipment, 2nd hand off a private individual would make a purchase almost impossible.  In addition, we are still not 100% sure on the warranty situation.  That just leaves the one man, small and medium size companies, where 'the boss' can make the purchasing decisions.

So, how much is a $70K 2nd hand scope worth?  The options are sell it directly to a company or if stuck sell it to a dealer, who in addition will want their cut.

Once sold, are there taxes on the money received and can they be off set against the initial prize tax?

In Ireland (and probably most of Europe) there is no tax on prizes, but there is tax on Capital Gains CGT. Here this is currently 33% with the first 1,270 exempt per year.  Fine if you want to keep the scope, but selling it will cost you.

For USA.  Start with 70k MSRP....actual market value is less than that...deduct 10% so $63,000. But it's second hand (not used), and you're not a reputable dealer guaranteeing the hardware. So probably another 20-30% (or more)... so $47,000. You're probably not selling direct, you'll go through an auction house or a second hand reseller... so another 10-15%.... so $41k.  But you paid 20k in taxes for MSRP, so you come out 21,000k ahead. But you're likely to be bumped into another tax bracket for all your filings. So the gain is 19k....  If you were low enough income to receive tax breaks or aid (possible for both potential winners) then you lose more... So 15k. You put in 20hr for 2 weeks, so subtract 1k. So your gain is $14,000 minus sellers risk. The risk value is the 20k taxes plus 1k work time... so you make out with a potential $14k profit, but also take a $21k risk doing it. Additionally if you're a student, like one of the possible winners seems to be, then a 70k bump in income is likely to end student aid if they have it.... so in that case possibly $0 total (or worse).

[ez24]

income is likely to end student aid if they have it.... so in that case possibly $0 total (or worse).

Never thought that a student may have to drop out of school by winning a scope 

These scope contests just keep getting better and better.

[Brumby]

If I may - It's not the contests that are the problem, it's the tax system.

Australia has no tax on prizes.  Even if you win $20,000,000 on lotto, tax bill = zero.  However, put that in the bank and you'll pay tax on the interest earned - but not on the capital.