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

The 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.)