No, it would not be correct accounting treatment to reduce prizes and awards by the entry fees.
The IRS 1099-Misc instructions require you to report Prizes and Awards in Box 3, Other Income. The individual who receives the Prize would be required to report the Fair Market Value of the Prize on his tax return.
The winner would be allowed to claim the cost of entry fees as an expense for earning the prize. Unfortunately, it would be claimed as an itemized expense for most individuals.
If the individual is a professional golfer, the income and expenses could be reported on a Schedule C as Business Income and Expense.
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