We don't know that. I've seen plenty of discount ads with fine print about "there might never have been any actual sales at the Suggested Retail Price we're giving you a discount from."
Valued at that by whom?
An immediate sale to an unrelated party is clearly at FMV, involving both a willing buyer and a willing seller, neither of whom was under any constraint.
Seth
One more try. You win a car from some show. They tell you it's worth $30K (MSRP). You immediately go to two dealers and negotiate a price for that model with those features. As that is what the seller and buyer are willing to agree on... that is the FMV for income. It is not what you can sell it at on E-Bay or what you can sell it at back to the dealer or in a classified ad.
Now you win a $2700 certificate. You negotiate what ever price you can with the retail establishment for whatever Beer stuff you want. Say it come to $4000. You hand over the $2700 certificate and pay the remaining $1300. You have $2700 as the FMV. You negotiated an arms length price with the dealer.
The prices offered by a merchant are subject to negotiation. Discounts are taxable to the extent that they decrease the price of the goods below fair market value.
The winner of a hole-in-one competition wins a car valued at $35,000 MSRP. He does not want the car. So he sells it to the dealer for $30,000. Is his taxable income $30,000 or $35,000?
Dick
See my last reply. The FMV is the price a dealer would normally accept from a willing buyer in an arms length transaction.
There's a very specialty car made. Two of them sell for $500,000 each. The manufacturer made a couple more, but they aren't selling. He donates one to a charity raffle. You win it. You go to a dealer and ask about the value; nobody will sell one for less than $500,000. Since you don't want to drive such an expensive car (and can't afford to), you sell it. The best price you can get is $150,000.
Are you sure your tax bill exceeds your proceeds?
What if you don't want beer stuff? You negotiate with a bunch of other people to sell the certificate, and the best price you can get is $2,000. How is that not the FMV of the certificate, being the price a willing seller and willing buyer agreed to?
Seth
Define "dealer" and tell me what makes them magic.
If I'm willing to sell something for $2,000, and do so, why is that less definitive than a "dealer" who claims he won't sell for less than $2,500, but doesn't actually have a sale at that price?
FMV is defined in terms of "willing buyer" and "willing seller". "Dealer" is not part of the definition.
For that matter, why isn't FMV the price a dealer would normally pay to a willing seller in an arm's length transaction?
Seth
You are creating a new set of facts and circumstances. You will need an appraisal.
I don't think it matters whether you want the stuff or don't want the stuff when it comes to how much income you have from winning a prize if you accept it! If you don't want it, disclaim it. No income. If you want it... $2700.
When you win a new car that is readily available for sale by automobile dealers, the FMV of that new car is what any new car dealer would be willing to sell it at to a willing buyer. There is nothing magic about it. New car dealers define the market. Go and find the best price you can from a new car dealer.
Who is qualified to appraise it? Only one (used) car of that model has ever been sold, and the price was $150,000. Therefore, that's the FMV for said car.
Why isn't that still constructive receipt? You had the right to receive it, therefore income.
Even though it's clearly worth $2,000?
Seth
The FMV is what a *willing seller* would sell it to a *willing buyer* for. I don't see "new car dealer" anywhere in that definition.
Why are "new car dealers" magic?
Seth
I'm done with this thread.
Me too! The raffle was yesterday. I didn't win.
Dick
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