If IRS agent awarded you a prize, then audited your tax return after? Legal or not?

IRS agents CAN'T award anything beyond accepting your claims on your tax return. In addition, you would claim the prize as INCOME, but there is NO gift tax on gifts under $12,000 (unless the limit went up) to a single person in a given year. Gift taxes are also processed on a SEPARATE form that is not filed with your income tax return.