That is freaking awesome for your buddy. I actually won a Skidoo REV 800 151 back in 2004. (I was riding a Yamaha at the time hence my name Yamadoo04) Yes they do consider it income so he will have to pay income tax on the sled. Coolest thing at the time for me was I basically had no other income that year so I was taxed at the lowest possible income tax rate. I think after taxes, title and registration fees it cost me about $2,000 total. Not too bad for a brand new sled.
So that is amazing to win a sled right, but now get this. 4 years later in 2008 my brother's wife won a Skidoo XP 800 163. Pretty amazing if you ask me to have 2 people from the same family to win sleds. Hopefully it is my year again to win a sled.