The transfer of title to a motor vehicle as a prize to the winner of a contest or drawing, whether or not tickets were sold, is taxed as follows.

1. (1) Upon transfer of title to a motor vehicle directly from a dealer to the winner, motor vehicle sales or use tax is due from the sponsor of the contest on the total consideration paid for the vehicle to the dealer. If no consideration was paid, motor vehicle sales or use tax is not due; however, the $10 gift tax is due.
2. (2) If a dealer transfers title to a motor vehicle to a contest sponsor, and the sponsor subsequently transfers title to the vehicle to the winner, the sponsor owes motor vehicle sales or use tax on the total consideration paid for the vehicle to the dealer and the winner owes a $10 gift tax. If no consideration was paid for the vehicle, the sponsor and the winner each owe a $10 gift tax.
3. (3) If a manufacturer or dealer is the sponsor of a contest or drawing, the only tax liability incurred upon transfer of title to a vehicle from the manufacturer or dealer to the winner is a $10 gift tax due from the winner.

Source Note:The provisions of this §3.80 adopted to be effective January 1, 1976; amended to be effective August 24, 1979, 4 TexReg 2795.