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https://www.writealetterwinahome.ca/

Recently, there has been a contest issued by Alla Wagner of Millarville, Alberta, Canada, where in lieu of selling her home (a difficult prospect at the present moment), valued approximately at $1.7 million CAD or $1.3 million USD, she is holding an essay-writing contest with an entry fee of $20.

While the property taxes in Alberta are more than manageable ($600 CAN a month!), they made a point of acknowledging that you'd probably want to check the federal and state taxes on prize winnings.

To that end, with regard to Illinois (my current state of residence) and United States tax law, how much would I be charged, say, if I were to receive this prize (an unlikely prospect, but still)? Or alternatively, who can I reasonably consult for accurate information on the matter (would consulting an attorney be expensive)?

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  • Straightforward normal income tax on the value. Why would here be a different treatment.
    – Aganju
    Commented Feb 14, 2019 at 7:34

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would consulting an attorney be expensive?

If you win a prize worth $1.3 Million USD, then getting the correct legal and tax advice would be cheap.

Assuming the winner is single and that last $ of income is in the 37% federal and 5% state tax brackets; that would make the Federal tax bill around $446K and the state tax bill around $65K. I am also assuming that you will be credited for any Canadian taxes you owe.

So unless you have that much money sitting around you would then be selling the house ASAP. Knowing the tax implications are important but so are knowing the process you need to go through to get the value appraised for tax purposes, and for getting the property sold.

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  • Man, considering that this contest is billed as an "artist or writer's paradise", it's pretty disillusioning to hear 99% of the populace (not even with regard to the artistically inclined) would have to pretty much have to liquidate the assets instead of moving in for the inspirational view they crave. Seems like an oversight?
    – the1banana
    Commented Feb 14, 2019 at 16:34

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