October 21, 2010

Prizes Given at Charitable Events

Question:

A church hosted an event primarily for religious purposes, but required guests to purchase a ticket or receive one from someone who had purchased a ticket for them. Several prizes were given away that were either purchased by the church or donated to it. Is the church responsible to issue a Form 1099-MISC with the fair market value of the prize in Box 3 at the end of this year?

Answer:

If a prize winner receives a non-cash item with a fair market value greater than $600, then Form 1099-MISC must be issued to the winner for its full value. Perhaps the most widely accepted authority for this requirement is simply the IRS instructions to Form 1099-MISC (link below).

Form 1099-MISC Instructions

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