You won a drawing - Car vs Cash

On New Year's Eve Eve I was picked for a drawing during the VIP party at the casino. I had a 1/6 shot at a $57,000 2018 Mercedes Benz GLE SUV and a 5/6 shot at $1000 cash. Each of us picked an unmarked envelope in the order we were drawn. We then opened them at the same time.

Someone went home very happy. They had a choice of dealership credit of $57,000 (no refunds at dealer for spending less) or $40,000 cash at the casino (70% of car value).

How would you evaluate the two choices? The dealership is a pretty large International group - Honda, Toyota, Porsche, Mercedes, Jaguar, Maserati, Audi.

At that ratio I'm taking the cash. Taxes on an extra $17,000. Dealership going to charge you closer to sticker price because they know you have to spend it there. And then the hassle of reselling. Do you just give the keys to some random person that shows up at your house wanting to test drive your undriven $60,000 car? And it was around -5F outside that week, screw that.

What say you?

cash, easily

I'd sell the $57,000 credit. Cant imagine it would bring less than 95% of face value.

Many years ago I won a car at Stations Casinos. I had a choice of a low end Mustang, a Taurus, or a F150 pickup. I had to take the $15,000 cash because I was working a play with some partners and the car would have complicated the whole transaction.

Quote: BTLWI

On New Year's Eve Eve I was picked for a drawing during the VIP party at the casino. I had a 1/6 shot at a $57,000 2018 Mercedes Benz GLE SUV and a 5/6 shot at $1000 cash. Each of us picked an unmarked envelope in the order we were drawn. We then opened them at the same time.

Someone went home very happy. They had a choice of dealership credit of $57,000 (no refunds at dealer for spending less) or $40,000 cash at the casino (70% of car value).

How would you evaluate the two choices? The dealership is a pretty large International group - Honda, Toyota, Porsche, Mercedes, Jaguar, Maserati, Audi.

At that ratio I'm taking the cash. Taxes on an extra $17,000. Dealership going to charge you closer to sticker price because they know you have to spend it there. And then the hassle of reselling. Do you just give the keys to some random person that shows up at your house wanting to test drive your undriven $60,000 car? And it was around -5F outside that week, screw that.

What say you?

Cash.

Cars, are just an expense and a terrible investment. Unless you really need a new car the cash is the only logical option.

70% of the car value is a bitter pill to take. Not that I endorse tax evasion, but if the $40,000 is in free play there would be no W2G. If you sell on the open market, I think you'd get about 85% of face value plus the fuss and risk of selling it. If I had no interest in the car, then I'd take the 40K in free play but would feel kind of jipped at the stingy offer.

Let's not forget, the MSRP is not the real value of the car.

I wonder if the dealer would let you get 2 cars for the $57k. $28,500 could get you a nice Toyota or Honda. If you needed two cars.

But, yeah, I would take the cash.

I think it depends on the $40k the casino is giving you. Is it FP? You said CASH in the OP... that means take another 30% out of that $40k for taxes... so really you're only getting about $28k... At that point so long as you don't have other reasons (such as chopping with a team immediately or something) it's almost criminal not to take the $57k credit... ESPECIALLY if the dealership lets you pay "everything including taxes" with the credit. I'd have to ask a tax guy, but a "credit" at the car dealership may not be something subjected to tax up front (similar to FREE PLAY at a casino) because it may hold no cash value technically but just be something the dealership honors. So you won't have anything of value until you actually get a car with the credit. Basically I'm overthinking this and I have no idea the tax answers. My guess is once you get a car (or two) you'd have to pay taxes on that... similar to running the FP through and hitting a W2G off the FP.

If the casino is offering $40k in FP and it can be used on VP, I'd take the FP.

If I could get away with getting 2 cars and paying less in taxes and possibly selling both (or 1 car) for $45k cash or more, then I'd probably do that too. I also do not support tax evasion, however, I think it's basically criminal that they can retax the same vehicle over and over on used sales. Thus, while I might not do it, I wouldn't care if someone else sold their "$20k" car for "$1k" because it was a "close family friend" or something.

Quote: Romes

If the casino is offering $40k in FP and it can be used on VP, I'd take the FP.

I'm sure you would still pay the taxes on your winnings too, right?

Quote: DRich

I'm sure you would still pay the taxes on your winnings too, right?

Of course, but at least then I could get back like 99%...

What are the rules for the casino cash? Do you have to play through it at least once?

Quote: Romes

I think it depends on the $40k the casino is giving you. Is it FP? You said CASH in the OP... that means take another 30% out of that $40k for taxes... so really you're only getting about $28k... At that point so long as you don't have other reasons (such as chopping with a team immediately or something) it's almost criminal not to take the $57k credit... ESPECIALLY if the dealership lets you pay "everything including taxes" with the credit. I'd have to ask a tax guy, but a "credit" at the car dealership may not be something subjected to tax up front (similar to FREE PLAY at a casino) because it may hold no cash value technically but just be something the dealership honors. So you won't have anything of value until you actually get a car with the credit. Basically I'm overthinking this and I have no idea the tax answers. My guess is once you get a car (or two) you'd have to pay taxes on that... similar to running the FP through and hitting a W2G off the FP.

If the casino is offering $40k in FP and it can be used on VP, I'd take the FP.

If I could get away with getting 2 cars and paying less in taxes and possibly selling both (or 1 car) for $45k cash or more, then I'd probably do that too. I also do not support tax evasion, however, I think it's basically criminal that they can retax the same vehicle over and over on used sales. Thus, while I might not do it, I wouldn't care if someone else sold their "$20k" car for "$1k" because it was a "close family friend" or something.

Romes whenever you win a car or cash in a drawing you are given a 1099 and not a w2g.

If you take the car you will not only have to pay taxes on the msrp but you will have to pay sales tax on the car. If they are just giving you credit I am not sure if that credit can be used for taxes. Also if you resell the car right away, do you have to pay capital gains taxes on it?

Cash just seems more convenient here.

Quote: GWAE

Romes whenever you win a car or cash in a drawing you are given a 1099 and not a w2g.

If you take the car you will not only have to pay taxes on the msrp but you will have to pay sales tax on the car. If they are just giving you credit I am not sure if that credit can be used for taxes. Also if you resell the car right away, do you have to pay capital gains taxes on it?

Cash just seems more convenient here.

If you take the car you pay tax on the fair market value of the car not on the MSRP.

Some casinos only offer 60% or 40% for the cash option. ...which shifts the decision for some people (they take cash at 60%, but car at 40%).

Worse, on some specialty cars/bikes, there is no cash option.

If you win $57,000 in dealership credit, you will pay income taxes on $57,000 regardless of whether you buy a car or sell your interest.

Sales tax on the price of the car is a completely different animal. You may be able to roll that into the $57,000.

Cash was "cash" in any form that I wanted at the cage. I choose a check for $40,000.

It was a good new year.

Quote: BTLWI

Cash was "cash" in any form that I wanted at the cage.

Did they at least have one of those giant novelty checks?

Quote: BTLWI

Cash was "cash" in any form that I wanted at the cage. I choose a check for $40,000.

It was a good new year.

Congrats, you made the right choice.

I agree with ahiromu.

The only way I'd ever take a car is maybe if I didn't already have one. Probably not even then.

Unless it's a Hyundai...then I'd take the car. Not really, but I love my Hyundai.

I might take a unique collector car. Depends what it was.