A man looking for art for his new home has won a $1 million Picasso painting with a $138 raffle ticket.
Jeffrey Gonano told the Pittsburgh Tribune-Review he's not sure he'll ever hang the masterpiece in his home in Wexford, in western Pennsylvania, given its value.
The 25-year-old Gonano, who works for his family's fire sprinkler business, learned Wednesday that his ticket had won the Paris raffle. Organizers say nearly 50,000 tickets were sold worldwide, for 100 euros apiece, to benefit a Lebanese charity.
The 1914 work, "Man in the Opera Hat," dates from Spanish master Pablo Picasso's cubist period. Picasso died in 1973.
McCrory said it's possible Gonano could have the piece appraised at a lower value than $1 million, thus decreasing the taxes owed. However, the IRS has appraisers who could get involved, he said.
“'Value' can mean different things to different people,” McCrory said.
Jennifer Jenkins, IRS spokeswoman, declined to comment.
If Gonano simply donated the painting to a museum, he would not have to pay anything, McCrory said.
“He would have the value of the painting as income and an equivalent amount as a charitable deduction. Zero tax effect,” he said.
However, McCrory said Gonano would be better off selling.
I don't understand why he would have to pay any taxes until he sold the painting. I assume it is being treated as a type of capital gains tax, where the difference between the cost of his ticket and the value of the painting is the amount gained. He technically shouldn't have to pay any taxes until he sells the painting, then he would have to pay tax on the money he received for the painting.
Source: Win a game show? That'll cost you
You may want to decline some prizes
Contestants should be prepared to pay taxes on every prize, even coupons and vouchers. If you win a year of housecleaning services or six personal training sessions, expect to be taxed.
When he was a broke college student living in California in 1987, Thom Singer, now 45, won $20,000 in cash along with a trip for two to Brazil, a sailboat and a stereo on "The $25,000 Pyramid." He also scored several "parting gifts."
"They taxed everything I won, including all the parting gifts, like a really ugly watch, coupons for a year's worth of cough syrup, a case of Otter Pops, etc.," Singer says. "I should have declined all the parting gifts, as most were dumb and went unused."