If I won something in a draw, then sell it, do I have to pay taxes on it?

[thebeefring]

I entered a draw and won.  I have no use for the product but my boss does.  He offered to buy it from me.  Will that amount be taxed as income?

[TurboTaxJeffrey]

Have you already taken possesion of the product?  May I ask, what was the product?

[thebeefring]

Not yet I haven’t.  It is soybean seed.

[warrencheswick]

If the prize won has increased in value from the day you won it til when you sold it, you should declare the increase in value as a capital gain. ie if you win a $20,000 car and sell it for $20,000 theres no tax owed. If you win a $1000 piano and sell it in a year for $1500, there would be a $500 taxable gain.