Can I use fair market value to adjust the amount of prize money I received after it was split evenly among my teammates? I won $675 but only received $350.

[maglib]

did you get a 1099 for the total?  You would have to declare that a portion of the 1099 was others and fill out nominee section during interview.

[Hal_Al · Accepted solution]

I can't find a nominee section in the 1099-Misc interview.

Using the fair market value adjustment will be the easiest way but might invite IRS scrutiny, since the adjustment is so large (percentage wise).
As maglib suggested, the proper way to do it is with a nominee adjustment. Enter the 1099-Misc, at the 1099-Misc screen in TurboTax and include the full $675. TT will put the income on line 21 of form 1040, as gambling winnings
Then enter a line 21 deduction, for $325.  In TurboTax (TT), enter at:
- Federal Taxes tab
 - Wages & Income
Scroll down to:
-Less Common Income
      -Misc Income, 1099-A, 1099-C
       - On the next screen, choose – Other reportable income - Enter the number with a minus sign (-) in front. At description, enter nominee adjustment to prize income

[maglib]

question while the amount to the other person is under $600, should he prepare a 1099 Misc to the nominee? I know if it was over $600 he would have to?

[Hal_Al]

I've seen mixed answers here. But, most suggest issuing the 1099-Misc, even if it isn't required.

[IreneS]

UPDATED FOR TAX YEAR 2019

If you received a 1099-MISC for the winnings, you can enter the amount as  Miscellaneous Income, and make an adjustment to the amount, using these steps:

1. Click on Federal > Wages & Income
   
2. In the Other Common Income section , click on the Start/Update box next to Form 1099-MISC.  
3. On the Let's get the info from your 1099-MISC screen, enter the amounts shown on the  1099-MISC.  
4. On the screen,Does one of these uncommon situations apply? mark the button for This was prize winnings and click Continue.
5. On the screen, Fair Market Value of Prizes and Awards, enter the adjustment to the value of the prize. 

[Edited | 3/23/2020 |  11:17 am PDT]