Fair market value on a cash prize when the payer paid the income tax for me

[Kim678height]

Can you tell me how I should figure the fair market value of my daughter's $1000 gift card prize she received?  The store that gave it to her also paid her income tax.  Her 1099-misc states $1250 of other income and Fed income tax withheld of $250.  The Turbo Tax program states that the FMV of the award might be less than what is printed on the 1099-misc. It further instructs me to "Enter the difference between the FMV of the prize received and the amounts listed on the 1099-misc.  If none, leave it blank."  The system already had me enter the income amounts ($1250) and the Fed tax withholding amount ($250) as recorded on the 1099-misc.   Do I make a FMV adjustment of $250 in that section or do I leave it blank?  In other words, Is the fair market value of her prize $1000 or $1250?  

Many thanks to anyone who could answer this for me, 

Kim

[ReginaM]

No, do not make a Fair Market Value Adjustment for your daughters gift.  The Fair Market Value of the gift is $1,250.  (The Prize of $1,000 + the payment of Taxes of $250 = $1,250 The Total Value of Gift Received).

[Kim678height]

Thanks a bunch!