How do I have to report sweepstakes income if I sell the prize?

I won a prize back in August 2006 worth almost as much as a car (about $9000). I still have it, but have never used it, and was just waiting for winter to end so I could decide if I want to keep it or sell it. I already paid sales tax on it.





But, for income tax purposes, I am assuming I have to report the entire value as 2006 income. That's fine, but what if I sell the item in 2007 for less than it's worth (say $7500)???





Can I then declare my sweepstakes income for 2006 as $7500, or do I have to report the whole thing? it's going to be hard enough to pay federal + state income tax on an extra $7500 let alone the full $9000.





Thanks

How do I have to report sweepstakes income if I sell the prize?
You have to report the fair market value of the prize in the year you won the prize. As long as you sell the prize for less than what you claimed it was worth when you won it, then there are no more additional taxes. If you sell it for more than $9000, then the difference is a captial gain.
Reply:Did they give you a 1099?? If not then they didn't report it. It's probably the more ethical thing to do to claim any money made from this.. but you could probably get away with not claiming it.
Reply:You have to report the whole value of the prize on your 2006 tax return. You had the prize at the end of 2006. It goes on Line 21 of the 1040 form.
Reply:u can get deductions on federal + state tax .





go through this tax filing site for federal taxes. here's the address