It is definitely incorrect. You should enter only one form in your tax return and the winnings do not include sales tax. That portion was not a winning and you actually paid that portion. My advice is to enter the lower amount and keep the records in your tax file, including but not limited to:
- Contest details of entry.
- Sales tax receipts paid to the trailer retailer.
- Host/Sponsor details which are part of the contest, 1099-MISC.
- Pictures of the prize trailer
The IRS has made the rules for issuing 1099s a bit confusing and at some point it should get more clear on who should be the correct issuer. The law is definitely clear that only income you actually received as a prize must be included in your taxable income. You are never required to enter income you do not or did not receive.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
