$15,000 or 9,000 Gallons of Gas?

[Lorena]

Original story: http://ap.google.com/article/ALeqM5i...RzuTwD8VT91KO0

Poll forthcoming
---------------------------
W.Va. Casino to Give Away Tanker of Gas 20 hours ago

WHEELING, W.Va. (AP) — A free tank of gas? That's nothing. A West Virginia casino is giving away a tanker of fuel. Wheeling Island Hotel-Casino-Racetrack spokeswoman Kim Florence said one lucky person will win about 9,000 gallons of gas or $15,000 in cash on April 18.

And with the price of gasoline at a record $3.41 a gallon in the Mountain State, the petrol could be worth almost $31,000.

You could really go places with that — like around the world nearly eight times if your car averages 22 miles per gallon.

That's a lot of trips to the grocery store.

Players can earn entries for the grand prize drawing at the track this Friday and next.

And don't worry about making parking arrangements for the tanker. Florence says the winner won't be taking one home. He or she will be receiving gift cards.

[MikeVic]

I think people would steal your gas.

[Lorena]

That money will put a nice dent on our credit cards... gas be damned.

[Lorena]

Originally Posted by MikeVic

I think people would steal your gas.

If they steal your gift cards, then yes.

[Mustang]

Gas.

I'd assume the gift cards would expire in a year so, I'd keep a years worth of gas (1,000 gals) and then sell the gift cards off at a discount.

I figure I'd still be on the better end of the deal as long as gas doesn't drop below $1.67 a gallon

[MikeVic]

Oops didn't see the gift card thing. Would the gift cards say like... good for 100 gallons?

[Lathum]

the cash is a no brainer.

In the time it would take you to use 9000 gallons of gas you cold invest the cash and make alot more moneey.

[Danny]

The cash, easy

[oliegirl]

Definitely the cash, no question.

[stevew]

Take gas. Sell to 3rd party gas station at 3 bucks per gallon. Profit.

[rkmsuf]

yeah but what if it's super unleaded

[Cringer]

Gas. And if I want to convert some of it to cash I just sell some gift cards.

[Marc Vaughan]

I'd take the Gas - use the publicity to sell the cards locally at around $2.50/gallon people will snap them up and you'd be cash up within a week I'd expect.

($22.5k vs $15k - personally I'd happily do a weeks work for $7.5k myself )

[Fidatelo]

I'd take the gas. It's value will continue to rise, while the dollar will continue to drop. It is also a good hedge against inflation.

Now, if the cards expire, I might reconsider. But first I'd look into the legality of expriring gift cards.

[Synovia]

Originally Posted by Fidatelo

Now, if the cards expire, I might reconsider. But first I'd look into the legality of expriring gift cards.

Depends on the state. In MA, its illegal for them to expire.


The question is, do they give you some sort of wierd giftcard for 15K gallons, or giftcards for the current value of 15K gallons (more likely).

[MikeVic]

Originally Posted by Synovia

The question is, do they give you some sort of wierd giftcard for 15K gallons, or giftcards for the current value of 15K gallons (more likely).

That was my question above as well. I don't buy gas gift cards, but I'd imagine it would be dollar amounts, not gallon amounts.

[rkmsuf]

Now does the gift card include the free car washes? That could really change the analysis.

[path12]

Give me the money, I'll pay off my debts and won't care nearly as much about the price of gas.

[MikeVic]

Can you gain points or air miles or whatever too?

[Sublime 2]

Originally Posted by path12

Give me the money, I'll pay off my debts and won't care nearly as much about the price of gas.

No Diggity

[sabotai]

Considering the size of the prize, what taxes would be applied? The cash one is easy, any typical tax you'd pay on getting $15k, but what, if any, taxes apply to getting 9,000 gallons worth of gas in gift cards?

[SackAttack]

Originally Posted by Synovia

Depends on the state. In MA, its illegal for them to expire.


The question is, do they give you some sort of wierd giftcard for 15K gallons, or giftcards for the current value of 15K gallons (more likely).

Ditto California, but with one little quirk.

A gift card used in a state in which it is legal for gift cards to expire, and then taken to California with a balance remaining, may still expire.

A gift card purchased in California which stays, unused, in California, may not expire. It's weird.

[albionmoonlight]

Originally Posted by sabotai

Considering the size of the prize, what taxes would be applied? The cash one is easy, any typical tax you'd pay on getting $15k, but what, if any, taxes apply to getting 9,000 gallons worth of gas in gift cards?

It still would not be hard to compute the tax. Either the cards have a cash value that you would use. Or, if the cards are for gallons, then you could just compute gallons X average price of a gallon in the area on the day of the gift.

[QuikSand]

Okay, if we make some reasonable assumptions here for right now:

Value of gallon of gas right now = $3.33
Tax rate paid = 40%

Then, we come up with this:

$15,000 cash prize triggers $6,000 in taxes, for a net of $9,000

9,000 gallons = $30,000, triggering $12,000 in taxes

So, you'd need to be able to unload the gasoline for a total of $21,000 for this to work out -- that's around $2.33 per gallon. I have no idea how much of your time and effort might be involved, but assuming that's relatively trivial (if you spend 50 hours, you're maybe in for an additional "cost" of a thousand bucks or so in practical terms) it seems like taking the gas is by far the better way to go here.

I, too, am puzzled by the whole "gift card" idea, but I'm assuming that would actually make the transferability easier. I'd think you could get 80-90 cents on the dollar for working gift cards to a widespread gas station.

[Raiders Army]

Show me the money!

[Synovia]

If they were some sort of special gallons gift card, or they somehow managed to count gallons instead of giving you current value of 9K gallons, would you be forced to pay capital gains or anything when gas appreciates?

[sabotai]

Originally Posted by QuikSand

So, you'd need to be able to unload the gasoline for a total of $21,000 for this to work out -- that's around $2.33 per gallon. I have no idea how much of your time and effort might be involved, but assuming that's relatively trivial (if you spend 50 hours, you're maybe in for an additional "cost" of a thousand bucks or so in practical terms) it seems like taking the gas is by far the better way to go here.

Did you factor in the amount of taxes you'd have to pay on the amount of income you generated from selling off the gift cards? (I would assume that you would have to pay taxes on the income you made from selling a product you had, regardless of how you came to own said product. But that's just an assumption, I don't know much about tax laws.)

[JeeberD]

Gas, easily. As prices keep rising, it would be nice to have the stuff for free...

[JeeberD]

Originally Posted by Dodgerchick

That money will put a nice dent on our credit cards... gas be damned.

Only a dent?

[EagleFan]

Cash. Aren't taxes usually due up front on these things? That puts you in a big hole immediately with the gas.

[albionmoonlight]

Originally Posted by sabotai

Did you factor in the amount of taxes you'd have to pay on the amount of income you generated from selling off the gift cards? (I would assume that you would have to pay taxes on the income you made from selling a product you had, regardless of how you came to own said product. But that's just an assumption, I don't know much about tax laws.)

No. Sort of. You only get taxed on the profit that you make when you sell something.

So, let's say that you get $10,000 worth of gas cards. You would then have to pay tax on $10,000. But, the cards would then have what is known as $10,000 worth of "basis" in them. That means that when you sell the cards, your first $10,000 of receipts is tax free. So, if gas goes up a bit and you sell the cards for $10,500, then you would have to pay tax on the $500. And, if you end up selling it for less, then you have a loss that you can offset against other gains, but that gets a bit more technical.

Really, though, one of the best ways to value something is to see what it sells for in an arms-length transaction. Let's say that you get 9,000 gallons worth of gas. And within a week or so you sell the cards to a local delivery service for $X dollars. Assuming that the sale was legit (i.e. not to your brother for a below market rate or something), you can be pretty safe in just paying taxes on $X.

[albionmoonlight]

dola--In a lot of cases, the sale price is the only way to get a fair value of something. Most of us know what 9,000 gallons of gas is worth. A lot of times, property is something like "a 50 year old diamond ring"--which has a much more subjective value.

[sabotai]

Originally Posted by albionmoonlight

No. Sort of. You only get taxed on the profit that you make when you sell something.

Ah, got it.

[lighthousekeeper]

i'll go with whatever quicksand decides.

[Danny]

Isn't it illegal in some place to sell gift cards?

[Lorena]

Originally Posted by JeeberD

Only a dent?

$15,000 would take care of our credit card debt, but once taxes are taken out, then yes, it'll leave a nice dent.

[Raiders Army]

Originally Posted by lighthousekeeper

i'll go with whatever quicksand decides.

sheep

[lynchjm24]

Originally Posted by Raiders Army

sheep

The majority who picked cash would do well to listen to him.

[sabotai]

Originally Posted by lynchjm24

The majority who picked cash would do well to listen to him.

Yeah, but I'm EXTREMELY lazy, so I wouldn't even do the hour of work to sell off the cards.

[lynchjm24]

Originally Posted by sabotai

Yeah, but I'm EXTREMELY lazy, so I wouldn't even do the hour of work to sell off the cards.

You would finish up without doing anything. If you just keep the gas you'll do better. If you can cover the taxes year one you'd have to make like a very high yield on the investment to do better with the cash.

If we give the cash the benefit of the doubt and say that a household uses 2000 gallons a year, figure it takes you 4 years to use the gas (this allows for the inevitable price increases).

If you invest 9,000 and somehow miraculously make 15% annually with interest credited monthly you'd make 7,338. Call it 5k after taxes.

If you take the gas you've made 18k.

Gas 18k > cash 14k. And that is if you are lucky beyond the realm of realistic outcomes in the current economy.

A more likely scenario is you make 6% - which is 2,900. Call it 2,200 after tax.

Do you really have to think about 18k (gas) versus 11,200 (cash)?

Now if you are paying 20%+ interest on the credit cards or can't put together the money for the taxes the first year then I guess you've got a tougher decision. I think even those scenarios are going to work out for the gas because it's early enough in the year to manipulate your taxes and taking the money that you no longer spend on gas and paying the principal down on the credit cards is still going to pay in the long run.

[MizzouRah]

My first thought is the money, but I think I would take the gas.

[lynchjm24]

Originally Posted by QuikSand

(if you spend 50 hours, you're maybe in for an additional "cost" of a thousand bucks or so in practical terms)

You'd be crazy to take the cash after 2 more seconds of thought. You could move 31k worth of gas to a corporation with a motor fleet for 26-27k in almost no time.

Even if we call it 25k, you've got 25-12 = 13k instead of 9k.

[sabotai]

Originally Posted by lynchjm24

Do you really have to think about 18k (gas) versus 11,200 (cash)?

If we are talking about using the cards versus taking the cash, yes. I don't use much gas. It would take me nearly 40 years to go through 9000 gallons of gas. I fill up my car, 10 gallon gas tank, twice a month, if that. If I use 240 gallons a year (and I'm still paying around $3.10 a gallon for gas in NJ, so that's a $744 a year expense), that's 37.5 years of free gas.

But what if I move to the city and use public transportation? What if I move to another country? What if prices come down? What if, in 10-15 years, we start making a major shift way from oil and I don't need gasoline anymore. What if I die in 10 years?

And I have around $8k in student loan and credit card debt right now.

So yeah, if we're talking about taking (and keeping) the gas cards vesus taking the cash, I'm taking the cash. I would rather get rid of an $8k debt immediately rather than eliminate a $744 a year expense.

If we start talking about taking and selling the gift cards, there's a lot of questions that the article doesn't answer. For one, would doing that be legal? Would it be violating a condition of the award? How do you get the gift cards? Do you get them all at once or over a long period of time in installments (example: 200 gallons worth of gift cards a year for 45 years)? Are they restricted for use in West Virginia for some reason? Are they restricted to a specific gas station chain? Is the use of them restricted in any other way? I could probably think of 100 more questions that would nee to be answered before you can really determine the worth of the gift cards this casino/racetrack is offering. None of the articles I can find on this story go into any more detail than the one above.

[Izulde]

The money.

I don't drive and never will, so it's an easy one.

[Anthony]

cash trumps all. you always take the cash.

what are you gonna do 10 years from now when we have an alternate source of fuel that is cheaper and you're stuck with a bunch of gift cards for what would be a more costly form of fuel?

[JeeberD]

It would still be free, though...

[BYU 14]

Originally Posted by Izulde

The money.

I don't drive and never will, so it's an easy one.

Just curious, if true why?

[lynchjm24]

Originally Posted by sabotai

If we are talking about using the cards versus taking the cash, yes. I don't use much gas. It would take me nearly 40 years to go through 9000 gallons of gas. I fill up my car, 10 gallon gas tank, twice a month, if that. If I use 240 gallons a year (and I'm still paying around $3.10 a gallon for gas in NJ, so that's a $744 a year expense), that's 37.5 years of free gas.

If you only use 240 gallons of gas you are quite a special case.

Clearly the assumption has to be that it's 9000 gallons upfront for this exercise and that it's legal to sell them (I can't see a situation why it wouldn't be legal to sell them).

[lynchjm24]

Originally Posted by Hell Atlantic

cash trumps all. you always take the cash.

Some good logic there. And I think people give me stupid answers in job interviews when I ask them financial questions....

[Anthony]

Originally Posted by JeeberD

It would still be free, though...

yeah, but when everyone is driving their fuel efficient cars that run on [insert prevailing alternate source of fuel here] and you still have your gas guzzler that runs on gas...

some silly people in this thread think you can simply walk up to any ole corporation and broker deals to exchange fuel/gift cards for cash. as if you stocked up on gas when it was under $3 a couple years ago and can sell your cheap gas for a profit. who here honestly thinks they can simply call up a corporation and say "hey, i'll sell you some gas for cheap"? to me, time is money. the amount of time it would take to actually sell the gift card is worth more than the profit one could make. time is a more valuable resource than fuel. take the cash.

that's like saying you'd rather someone give you a house worth $500K in this horrible housing market rather than someone give you $350K cash. if you take the house (providing you don't already own one) then you don't have any business discussing financial hypothetcial questions. and i'm looking at lynchjim when i say this.