The Taxing Power

Whether it was a benefit or a curse, taking Federal Income Taxation last semester at least meant I saw this complication coming the moment Oprah announced the big surprise:

When Oprah Winfrey gave away 276 cars last week to the audience of her show, images of people laughing, jumping, crying -- some hysterically -- filled the airwaves and the give-away became stuff of legend. Late night talk show hosts and newspaper columnists are still talking about it.

But now some of those eager prize-winners have a choice: Fork over $7,000 or give up the car.

According to a spokeswomen for Harpo Productions Inc., Oprah's company, the recipients must pay a tax on the winnings, just like any prize.

This is a common occurrence for anyone who goes on a game show. I don't know if there is anyway to get around it, though I suppose Oprah or Pontiac (or someone else) might be able to give tax-free gifts of $7000 to each recipient to cover the income tax liability. Not sure about that though (I didn't say I understood the class).