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Friday, June 2, 2006

Prize in Closest-to-the-Pin Contest: The Golf Course!

Golf_course_2The owner of the Augusta Hills Golf Course in Albion, Indiana is employing an unusual strategy to fund his retirement:  he is holding a closest to the pin contest on the par 3, 130-yard 15th hole.  Under the contest rules:

  • Entry fee: $1,000
  • Minimum number of entires: 1,500
  • Maximum number of entries: 2,500
  • Winner receives:
    • 18-hole golf course
    • clubhouse
    • maintenance building
    • storage building
    • equipment (including 30 golf carts)
    • no debt on the property
    • Entry deadline:  August 1
    • Contest begins:  September 5

Tax issues abound:

  • Seller:
    • Ordinary income of $1.5 - 2.5 million?
    • Capital gain after basis offset?
  • Winner:
    • Ordinary income of fmv of course - entry fee?
    • Acquisition of course for $1,000, which becomes basis in the property?
  • Non-winning participants:
    • Any way to deduct the $1,000 entry fee?

For press reports, see the Indianapolis Star.  (Hat Tip: Joshua P. Hollingsworth.)

http://taxprof.typepad.com/taxprof_blog/2006/06/prize_in_closes.html

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Comments

I vaguely recall reading about a simliar arrangement with regard to a bowling alley. The tournament winner got the keys. Certainly not a bad way of creating your own market.

Posted by: Jon Lazenby | Jun 2, 2006 6:19:50 AM