Odds of winning Spelling Bee on The Price is Right

At this link

https://www.yahoo.com/autos/woman-loses-her-mind-winning-120-000-aston-195648461.html

there is a video of woman winning a $120,265 Aston Martin on the game show The Price is Right. She won it by winning a game called Spelling Bee.

Rules to Spelling Bee: On the game board there are 30 tiles, numbered 1 thru 30. Hidden under 11 of the tiles is the letter "C." Hidden under 11 of the tiles is the letter "A." Under 6 of the tiles is the letter "R." Under the last two tiles is the word "CAR."

In order to win the grand prize, the woman has to select one of the two CAR tiles OR spell out the word "car" by selecting a "C" and and "A" and an "R." Each of her selections is completely random.

At best, she gets to select a total of exactly five tiles. She automatically gets two tiles for free. She gets an additional tile for correctly answering each of three questions. (Which she does.)

Assuming she has a total of five tiles to work with, what are the odds of winning the grand prize?

Assuming she incorrectly answered one of the questions posed to her, and she only had four tiles to work with, what were her odds of winning?

I've estimated them, and they can be found in the SPOILER below, but I'm not sure if my estimation is correct. Would anyone else like to take a stab at it?

When I initially watched the video, when she was offered $25,000 instead of continuing to play, I thought she should take the money. But after I estimated the odds, if I estimated them correctly, she would have been a fool to take the money.

Any idea how much taxes she'll have to pay to get the car?

That seems like an very high percentage given that she has 4/15 chance of selecting the car tiles but even with just that taking 25k would be a terrible decision

Do the C-A-R tiles have to be in order to count?

Quote: AcesAndEights

Do the C-A-R tiles have to be in order to count?

No

Quote: EdCollins

At best, she gets to select a total of exactly five tiles. She automatically gets two tiles for free. She gets an additional tile for correctly answering each of three questions. (Which she does.)

Clarification: she is shown three prizes, and has to guess the price of each within 10 dollars either way in order to get another tile. Note that if she gets any of the three prices exactly right, she automatically wins all three available tiles.

Before saying that she'd be a fool to take the money, please consider the liquidity.

If you win, you win a $120,000 car, on which you must pay CA state and federal taxes. If you sell the car, you must pay taxes on the money you earn from selling the car, and that's IF you can find a buyer at a reasonable price.

How much would one have to sell the car for in order to beat the money one would have after paying the taxes on $25,000 cash?

Quote: Deucekies

Before saying that she'd be a fool to take the money, please consider the liquidity.

If you win, you win a $120,000 car, on which you must pay CA state and federal taxes. If you sell the car, you must pay taxes on the money you earn from selling the car, and that's IF you can find a buyer at a reasonable price.

How much would one have to sell the car for in order to beat the money one would have after paying the taxes on $25,000 cash?

Not sure you've got the tax situation right.

You would absolutely have to pay taxes on the fair market value of the car when you receive it. But if you sell the car for less than that value (which you likely would), you wouldn't have to pay any taxes as you aren't "earning" anything. The buyer would likely have to pay sales tax and other registration crap depending on the state.

So if you pay all applicable taxes on the $120K and sell the car for $100K, you're still coming out way ahead of $25K minus taxes.

Reminds me of a guy I know who won a car at the end of 2014 at The Palace. He had no idea that if he took cash instead of the car, he'd still be taxed at the retail value of the car. (or so he told me).

He said it really fouled up his finances taking the cash. In retrospect, he'd have taken the car and just sold the car. (but he's in Louisiana, won it in Mississippi - we don't have near the taxes California does. )

I think I'd take the cash, too, regardless. I don't need a car and don't want to have to pay taxes on car that doesn't come with a guaranteed sale price that's enough to cover the taxes.

Also worth considering: long-term EV doesn't carry as much weight when you are only allowed to play the game one time.

miplet, thanks.

Quote: Deucekies

Also worth considering: long-term EV doesn't carry as much weight when you are only allowed to play the game one time.

Yes, good point.

Quote: ThatDonGuy

No
Note that if she gets any of the three prices exactly right, she automatically wins all three available tiles.

Ah, I didn't know that. Of course, I don't watch the show and I've never seen the game before. Thanks.

On a somewhat related note, a guy just won a $139,000 Mercedes on The Golden Road on TPIR.

That's all too complicated for me.....
But Vanna White still looks pretty hot considering she's got to be pushing 70!
Ok, pushing 60, but still....

Oh, it's my turn? Pick a letter?
I'll take Vanna for a couple hundred.....

Quote: AcesAndEights

Not sure you've got the tax situation right.

You would absolutely have to pay taxes on the fair market value of the car when you receive it. But if you sell the car for less than that value (which you likely would), you wouldn't have to pay any taxes as you aren't "earning" anything. The buyer would likely have to pay sales tax and other registration crap depending on the state.

So if you pay all applicable taxes on the $120K and sell the car for $100K, you're still coming out way ahead of $25K minus taxes.

I am not 100% sure how the taxes work but this has always been my take.

You win car, you must transfer car into your name and pay applicable sales tax to the registering state.

During tax time you have to pay income tax on the prize. I believe you would pay taxes on fair market value of the car as income. If you sell the car you don't pay taxes on that money as it was not earnings and you already paid the tax. What I am not sure about is what if you sell the car the same year. Would you pay taxes on what you received for the car as that would be fair market value or the cost of the car.

I would actually take the 25K I think. Sure going for the car is +ev long term but with only 1 shot at playing the game who the hell wants to be on the wrong side of the curve with ZERO chance of realizing your EV.

Quote: GWAE

I am not 100% sure how the taxes work but this has always been my take.

You win car, you must transfer car into your name and pay applicable sales tax to the registering state.

During tax time you have to pay income tax on the prize. I believe you would pay taxes on fair market value of the car as income. If you sell the car you don't pay taxes on that money as it was not earnings and you already paid the tax.

Unless you are paid more than the amount on which you paid the original tax, in which case the IRS considers it a capital gain. Note that if you sell it for less than the taxable amount, you may not treat it as a capital loss.

Also note that you can still bail out after some of the tiles have been revealed. For example, if the first two turn out to be both Cs, there are still three unrevealed tiles left, and you can stop at that point and take the $15,000.

(Note for people unfamiliar with the game: usually, it is played for a much cheaper - $20,000 or so - car, and the tiles are worth $1000 each instead of $5000.)