Your client, Simon Che, is an avid Texas Rangers fan. Last March at the Rangers’ home opener, as a result of a random drawing of those in attendance at the game, Simon won 300 Shipley Do-Nut coupons. Each coupon entitled him to a cup of coffee and a free doughnut or a dozen doughnut holes.

Simon used some of the coupons (approximately 20), but he found that eating so many doughnuts directly conflicted with his goal of losing weight. The unused coupons expired on January 1, 2023. As a result, Simon was surprised when he received a Form 1099 in February 2023 that valued his prize at $900. Simon would like to know whether the value of the doughnut coupons should be included in income and asks you to research his question. If you conclude that their value should be included in income, Simon also would like to know if he can reduce his gross income by including in income only the value of the coupons that he used. He has the unused coupons as documentation that neither he nor anyone else used them.