That Time Oprah Gave 276 People 'Free' Cars That Actually Cost Them $6,000 In Taxes

[Yo_Mama_Been_Loggin]

It’s the 15th anniversary of one of the greatest publicity stunts in all of television—the day Oprah Winfrey surprised an audience of hundreds of people in need of reliable transportation with brand-new Pontiac G6 sedans, but then left them on the hook for the thousands in taxes that came with them.

The episode started with Oprah pulling 11 people seemingly at random from the audience and announcing what they all had in common—they all needed a brand new car, so Oprah gave each of them one. The audience, suffice it to say, began to go crazy.

Then a little box was handed out to every audience member, and Oprah informed them that inside just one of the boxes was the key to a brand new Pontiac G6. One more person in the audience would join the 11 others in Oprah’s grand giveaway. It was expertly crafted to throw everybody off the scent.

When Oprah finally let everyone open their boxes, everybody found a key, and everybody lost their mind. It was incredible television.

-snip-

The problem for everybody who got a car, though, was that neither Oprah, the TV network, nor Pontiac accounted for all of the taxes the new vehicle owners would have to pay the government—a tax on the full $28,500 (in 2004 dollars) price of the car.

https://www.msn.com/en-us/autos/news/that-time-oprah-gave-276-people-free-cars-that-actually-cost-them-dollar6000-in-taxes/ar-AAHgdSS?li=BBnb7Kz

Sometimes good intentions have unintended consequences.

[qazplm135]

1. I mean worst case

sell the car and you get 22K in profit that you can use to buy a cheaper car.

I'm sorry but the intention and the positive result outweighs the consequences.

[Sherman A1]

3. Agreed

It was a very nice thing and for those might have found a tax liability, there is always refusing the gift as an option.

[StarfishSaver]

4. More of the story:

But this was sort of uncharted territory for a television promotion, and likely done completely in good faith despite being ultimately rooted in the marketing department of General Motors. Still, winners of the cars had to either take the car and pay the tax, sell the car and still cover the tax fees, or refuse it altogether.

In later promotions, Forbes points out, the Oprah team had learned their lesson, writing checks and giving them to audience members along with the pricey prizes in an effort to offset the sudden burden of a spiked income tax.

But as for the big G6 giveaway episode, Oprah got her iconic “you get a car” moment, the network got unprecedented ratings, Pontiac’s marketing team got a ton of buzz, and at least some of the audience members were able to get away with a brand new car, nearly free of charge.

[qazplm135]

12. doesn't change my point

the worst case was that they got a car for 28K that they could see for 22K net.

so effectively, Oprah gave them all a check for 22K tax free.

If she later, effectively wanted to give them a check for 28K tax free is great on here, but I for one wouldn't have complained one bit if she didn't.

Because 22K was more than I made in any year in the 90s.
It was more than a year of my law school back then which was about 20K a year.

I'd have been living like a king!

[StarfishSaver]

15. I wasn't disagreeing with you

I added that to backup what you were saying.

[malaise]

38. +1,000 n/t

[MaryMagdaline]

66. Exactly

No big deal.

[Sneederbunk]

2. Could almost make one refuse the gift. Almost.

[dem4decades]

5. I'd gladly pay 6k to save 25k.

[Wounded Bear]

6. If you have it...

[dem4decades]

7. You have a 20k asset that you didn't have. you can cash it out and make a 14k profit. For sitting

in an audience for an hour. Really, what's the big deal?

[qazplm135]

13. you do have it

sell the car.

You have almost a year probably to sell it before the tax bill comes due.

[Demovictory9]

45. me too

[Hoyt]

8. If the taxes were a problem, sell the car, pay the taxes, and pocket around $15,000.

Should be no controversy.

Some people just gotta gripe.

[SWBTATTReg]

9. Absolutely man...some people see the glass as half empty, vs. half full. $6000 for a new car ...

(the $6000 in taxes) is amazing for all of these people and some are still complaining. Talk about choosy beggers (like on UTube)...

[LisaL]

20. And if you can't afford that much in taxes, presumably you can sell the car for more than $6,000.

[Cartoonist]

10. All game shows have the same deal.

Income is income.

[A HERETIC I AM]

24. Damned straight.

Winning big on “The Price is Right” or any other show comes with a steep cost.

Seems to me I remember reading about lawsuits over the years on this subject.

Just give me the cash and I’ll deal with the IRS next April.

[LisaL]

27. So if lucky me doesn't win anything at least I don't have to pay taxes on it.

[A HERETIC I AM]

37. That's right!!

What are you going to do with your new found wealth?

[dixiegrrrrl]

68. If you don't win, you've lost, right????

Seems fair that if you pay taxes on a win, you could be able to deduct the loss from your taxes.

[Gidney N Cloyd]

48. Aunt Bee ran into that problem on the old Andy Griffith show.

[IADEMO2004]

11. What is more fun than having a piss on a silver lining? Democratic Debates

[Indykatie]

14. It Must Be a Slow News Week Over at MSN. This is What I Call a Click Bait Story.

Why is this even a story in 2019? The tax situation should have been raised and addressed when 2005 taxes were filed.

Gifts Like This Are Problematic B/C of the tax implications. Even if Oprah had grossed up the gift to cover the taxes on the cars then that money would also be taxable. Folks have a choice to pay the additional taxes at tax time or sell the car. They would have been made aware of the Tax situation at the time of the gift. A friend won a special edition Camaro from a Casino promotion valued at $50,000. They gave her the option though of taking the car and the ensuing tax liability or $30,000 in cash. She took the money and ran.

[A HERETIC I AM]

25. Your friend did the right thing.

Smart move.

[hunter]

16. I bought a new car once when I was young and foolish. I'll never do that again.

If I'd been in the audience that day I would have refused the car and asked Oprah to donate it to her favorite charity, maybe one that drives senior citizens to their doctor's appointments or a home hospice care worker.

I drive a $1000 used car. It's in protest of car culture which is unsustainable on a planet with a human population approaching 8 billion.

[Skittles]

36. what's wrong with a new car?

my car was new once, but now it is 15 years old

[hunter]

46. My new car, which I bought before our children were born...

... didn't survive their teenage driving years. Kids don't pay attention to minor mechanical issues until they become major ones. They have things to do, places to go...

The first family car my wife and I bought together didn't survive their college years. One of our kids lent it out to some college friends who wrecked it. Fortunately the only injuries were to the car and the tree they hit. Air bags and seat belts work.

Neither car was worth much anymore, before or after. I couldn't be too upset.

I wrecked my own car when I was in college but it was on my parents' insurance. I was the only one hurt in that accident but I refused to go to the hospital, which in retrospect was really stupid. The Highway Patrol had my car towed away and left me sitting on a curb. Eventually I got up and rode the bus home. That was four decades ago... yikes!

In a sustainable future most adults don't own cars. They live in attractive urban environments with excellent public transportation.

[Cattledog]

17. GA man wins $10 million lottery, costs hims $3.1 million!

Now he only has $6.9 million. Calls the Lotto a scam!

[LisaL]

22. Yea, exactly. The story is absurd. If somebody gifts you something expensive, over a certain amount,

you have to pay taxes.
The same goes if you win the lottery. Somehow that doesn't stop people from playing the lottery.

[nuxvomica]

18. Couldn't they have just opted for cash value?

I once won a contest for a diving vacation in Honduras and chose cash value instead because I had heard that was common with shows like Let's Make a Deal, which the producers actually preferred because it eliminated logistical issues like how to get the refrigerator delivered, etc.

[zipplewrath]

54. Yes

I can't comment on this particular instance, but often a "prize " car actually has to be collected at a dealership and they often will offer you cash for it so you can pay the taxeds. You can even "trade down " and potentially get a good deal.

[LisaL]

19. That's true of all gifts, though.

If it over a certain amount, you have to pay taxes on it. I presume if Oprah gifted me with the car, I would have to sell it, pay taxes, and pocket the difference.

[Ms. Toad]

59. It's actually not.

The recipient is never required to pay taxes on a gift. It is the donor who potentially has to pay taxes - not the recipient.

Who pays the gift tax?
The donor is generally responsible for paying the gift tax. Under special arrangements the donee may agree to pay the tax instead. Please visit with your tax professional if you are considering this type of arrangement.

https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes#1


So this story (if it truly was a gift) makes no sense at all.

[LisaL]

21. Those are absolutely intended consequences.

If gifted over a certain amount, you have to pay taxes on it. There is nothing unusual about that.

[pnwmom]

23. Usually the giver pays the taxes, in my expiernce. Oprah had that option. n/t

[LisaL]

26. I had a friend with a similar situation. They won something at a fair and then found out they had to

pay taxes on it. So I am not sure if the giver usually pays the taxes. Seems like a normal situation to me.

[pnwmom]

29. The fair could have paid the tax and so could Oprah. That is the usual thing.

And it's not like she couldn't have afforded it.

https://blog.taxact.com/gift-tax-do-i-have-to-pay-gift-tax-when-someone-gives-me-money/


The person who makes the gift files the gift tax return, if necessary, and pays any tax.

SNIP

Does the gift recipient ever have to pay gift tax?
If the donor does not pay the tax, the IRS may collect it from you.

However, most donors who can afford to make gifts large enough to be subject to gift taxes can also afford to pay the tax on the gifts.

[LisaL]

39. The cars were considered prizes, not gifts.

"General Motors, the parent company behind the now-defunct Pontiac, covered the $1,800 state sales tax as part of the promotion, but since the vehicles weren’t considered as gifts to the audience members by the government, but instead promotional prizes (like winning the lottery, winning a car is calculated as part of a person’s gross income, so it’s taxed as income), the new G6 owners were on the hook for an estimated $6,000 to $7,000 in state and federal income tax."

https://www.forbes.com/sites/kellyphillipserb/2016/09/13/a-look-back-at-oprahs-ultimate-car-giveaway/#2c91146c60ff

[pnwmom]

49. Okay, that's the legal excuse. But nothing prevented Oprah from making the tax payments herself,

with that amount being a gift from her to the receiver.

And most of the people happily receiving those vehicles clearly didn't know they were being asked to pay $6K for them.

[LisaL]

52. You don't look a gift horse in the mouth.

Again, you could always refuse the prize or a gift if you don't want to deal with the taxes. These people had options;
1) Take the car, use it and pay taxes
2) Sell the car, pay taxes, keep the difference
3) Refuse the prize
I would have picked option #2. It's a no brainier. I sure as hell wouldn't be complaining for years about winning a car.

[Ms. Toad]

60. If you win something it is not a gift.

You've boght a raffle ticket, bought a lottery ticket, paid an entry fee, etc. When that produces income for you, it is taxed as income (not a gift).

[defacto7]

31. I'm no accountant but isn't there a circular problem there?

If they pay the tax, that is more income which has more tax, etc. At some point a person might get into a higher tax bracket and the taxes on their entire income goes up, and it continues on. It's hard to know if that works or not. What was originally $6k in tax could easily double or even more.

[Ms. Toad]

61. Increasinng income to cover the anticipated taxes is pretty common.

It isn't perfect, as you suggest, but you can get close enough so that the impact is neglible.

But - gifts aren't taxed to the recipient, so something fishy is going on here if the story is true.

[moose65]

67. That's not how taxes work

If you earn enough to get into a higher tax bracket, you’re only taxed more on the part above the threshold for that tax bracket. The taxes on your entire income don’t go up. They owed $6000 in taxes and that was it.

[sarisataka]

28. That was a serious oversight

If neither Oprah nor anyone in the network considered the taxes on such a giveaway. That was the first thing that came to mind when someone told me about it.

[defacto7]

34. The knowledge of taxes on prizes has been around since TV

started having prize shows. It's decades old. I can't see how the network could overlook TV history.

[unblock]

44. It's not a problem. You win stuff you pay taxes.

Complaining about taxes is boring and selfish and rotten.

Want to lower your taxes? Refuse to accept the car. No takers? Then shut up and pay your taxes.

[aeromanKC]

30. Take a tip from Aunt Bee

No worries, just keep the garbage disposal and TV, sell the rest.

[Captain Stern]

32. I'd still rather have been one of the 11 people that got a car.

Despite the 'problem' of having to pay taxes on the $28,500 that somebody just handed me, I'd still rather be one of the people that got a free car than one of the lucky folks in the audience that didn't get saddled with that 'problem'.

[LisaL]

40. Everybody in the audience got the car, not just 11 people.

[Captain Stern]

72. Then, I wish I'd been in the audience. n/t

[GeorgeGist]

33. Sell the car and take the cash.

[LisaL]

41. Exactly.

For those who are crying about these poor car winners, here is a story of how one woman dealt with it.
She sold the car and started her cosmetics company with the money. Getting a $28,000 car is not a bad problem to have.
https://www.huffpost.com/entry/oprah-car-giveaway_n_3861863?ncid=edlinkusaolp00000003

[defacto7]

35. I think when the show was over the producer should have told them,

"No.. not the car... just the key."

[TeamPooka]

42. $28K new car for $6K? I'll take ten, please and thank you.

[unblock]

43. Oh ffs. You get stuff you pay taxes. I'm sick of people complaining about taxes

Waaaaah, I won a car, now I have to pay for registrations and insurance and gas and parking and why can't oprah or the government pay for that too waaaaah.

F*ck off all you greedy selfish jerks. Shut up and pay your taxes on your windfall. If you don't have the cash, sell the damn car and pocket the difference and be happy that you still got a nice gift that just fell into you lap.


On rare occasions, some sweepstakes winners have a real problem because the stated value of a win (particularly a vacation package) is overvalued so much that the taxes make it hardly a bargain. They may be better off declining the prize. Those people have a legitimate beef.

Not buying that this was the case for new cars and it's certainly not the case for cash prizes.

[Initech]

57. Really, it's tax law 101.

You get a gift that costs $28,000 you're going to pay taxes on it. It's that simple. Or face an audit. Personally I'll take the former.

[Ms. Toad]

62. Unfortunately, you just failed tax law 101

Last edited Sun Sep 15, 2019, 01:48 AM - Edit history (1)

Gifts are taxed to the donor, not the recipient. You give a gift and you pay taxes (it's treated as part of your estate, given early). For gifts under a certain amount, you don't have to account for them - which is why most people don't understand tax law 101.

Here, apparently, the cars were treated as prizes - not gifts. Prizes are treated as income, and taxable. That's tax law 101.

[Initech]

69. I think I fell asleep during that part of the lecture. I'll show myself out.

[Ms. Toad]

71. It's a very, very, very common mistake.

[elocs]

47. Yeah, people forget about the taxes owed on stuff they win or are given.

Just like the houses that get all remodeled for the tv show and then the owners can no longer afford to pay the property taxes.

[GReedDiamond]

50. I knew one of the contestants on Project Runway, season 3...

...Jeffrey, who ended up winning that year (2006).

One of his prizes was a brand new car. He ended up donating the car to a charity and got a substantial tax credit, because he did not want to pay the tax on it.

It worked out very well for him.

[VarryOn]

53. Like a lot in life, it's just math nt

[blueinredohio]

55. I was under the impression General Motors gave those cars away

not Oprah. But if someone gave me a brand new car I would take it in a heartbeat. With no complaints.

[nitpicker]

56. That's why I only took the "free"conference fees

Because it would only cost me $100 in tax on the old line 21.

I'm suspecting that there were people lined up at the back of the lot to buy the cars back.

[cbdo2007]

58. This is easily one of the most petty, ridiculous things to complain about.

People given a gift of $22,000 ($28,000-$6,000) and they complain about it and it turns into a national news story.

If they don't want it, they should politely decline and move on with their lives.

[obamanut2012]

63. +1

[Initech]

70. Hey if they don't want it, I'll take it!

[Blue_true]

64. Gifts like that need to be tax protected to the reciever.

Otherwise the reciever gets stuck with a big tax bill.

[Ilsa]

65. Put the car up for collateral for a loan

to pay your taxes. And it might not be 6Gs if they have typically have refunds. $6,000 paid out over four years at 8% wouldn't be a big note, maybe $150.