Well, taxes are due on what the FMV of the prize is, not the ARV and it's the FMV when you actually take possession, not when the contest started So, if you actually do win something, you should do your own research and see what the FMV of the prize is/will be. A vacation priced at 30K is going to be full Y fares, rack room rate, etc..., i.e., the company is lazy. You'd never actually pay that and doing 10 minutes of research would most likely find the same prize for, say, 10K or less. I never let an inflated ARV keep me from spending 30 seconds to enter one of these sweepstakes. If you do the research and decide you don't want the prize, you can always decline it later without any liability.
What do then if you actually want the prize? Ask the sweepstakes promoter to adjust the ARV to the actual FMV (that you researched) and 1099 for that amount. And/or file a 1099 incorrect form (forget the form# offhand). Or you could adjust it yourself on your tax forms and report the diff. as negative income.
it's important to do these things before you actually accept the prize. And while some sweepstakes require you to accept the prize within a certain timeframe, you can use this to your advantage. Say, you win a car, if you can wait until the next model year's models come out, your prize's FMV will be lower.
