I won a boat in a national contest and hope to take delivery by the end of year. I know I will have to pay income taxes, but my question is will I have to pay the 6.25% on something I am not paying for (although the manufacturer will issue me a 1099). The only thing close on the state website I can find is in relation to a "gift", which in fact this is. I am sure I will have to pay registration fees, etc.

TIA.

You’ll have to pay sales tax at the rate of the location picked up in Texas,license and registration

You need to contact a CPA before you accept the boat and fully understand all of the tax consequences. Do not just take advice from a site like this. You are dealing with way to much money for that. If a 1099 is being issued it could result in a gift tax rate of 24% from the IRS on top of the state tax.

Yes, I did that right after I confirmed I won it. I have the 1099 amount already from the manufacturer and understand the IRS tax consequences, which will be closer to the 30% mark. What I am asking is if there will be a state sales tax?

I don't know the answer to your question, but I'm pretty sure one of the guys at Bass Champs could give you the correct info. They give away boats all the time.

https://basschamps.com/contactUs.cfm

Yes, you'll have to pay sales tax, title, and registration fees on boat, motor, and trailer.

X2

You got me curious, so I'm looking on the Comptrollers website to see if I can find the answer.

Congrats on winning the boat

you will have to pay the sales tax on msrp value.

they are pretty cut and dry about it.

https://tpwd.texas.gov/regulations/...ements/tax-and-bill-of-sale-requirements

Congrats...Maybe another option (worth looking into).....do you really need or want prize.....Maybe you could take CASH instead of....then only take hit on IRS....

Well, I spent some time reading the Texas tax codes ... found the answer https://statutes.capitol.texas.gov/Docs/TX/htm/TX.160.htm#160.022

A prize boat is not subject to "sales tax", but it IS subject to a "use tax" which miraculously is the same amount as sales tax would be (6.25%) on the value of the prize boat.

Learned something new and interesting, thank you.

Thanks for the feedback guys. The IRS states market value, and the manufacturer has given me an amount (1099) which I believe is around wholesale. So I will being paying sales tax on that.

As far as a comment above this was a prize boat in a national contest from the manufacturer, not a tournament boat where they provide a boat certificate. So taking the cash will not be an option unless I see the actual boat. However this one will come tournament rigged (PP Blades, dual Lowrance Live 9's, & Ghost TM), so it's an upgrade from what I have.
'