Employer Weight Loss Challenge

[waid10]

Employer has organized a weight loss challenge.  Participants pay a $25 registration fee to participate.  The winner takes the pot.  No employer money is involved.  Are the winnings taxable to the recipient? 

Thanks.

[My 2 cents]

1 hour ago, waid10 said:

Employer has organized a weight loss challenge.  Participants pay a $25 registration fee to participate.  The winner takes the pot.  No employer money is involved.  Are the winnings taxable to the recipient? 

Thanks.

How would this differ from any other gambling enterprise?  How could they not be taxable to the recipient the way that Super Bowl pools are?  Yes, I know - who ever puts Super Bowl pool winnings on their 1040?

Worry more about whether there are legal issues concerning running such a contest in the first place.

[CuseFan]

The IRS would say it's taxable. That the Employer organized but the incentive is funded solely by participating employees does appear to be gambling more than a wellness incentive. Also, that the Employer organized (which I assume also means collected money and will distribute the "winnings") there is likely a legal tax reporting obligation for the Employer. Now if employees did this on their own, it's an office pool and, tax treatment aside, the Employer has no reporting obligation. Can you picture the discussion with the TPA at year end - Why is John's plan comp $500 less than his total comp when there aren't any exclusions? Oh, those are his winnings from the weight loss contest we had, that's not compensation. And such questions/issues seem par for the course in this venue!