Oh man:
http://jezebel.com/5694717/everyone-los ... ite-things
Just in time for Black Friday.
(I figured this category covered dealing with non-ERErs.)
Oprah's Final Favorite Things
-
RightClawSouth
- Posts: 123
- Joined: Wed Jul 28, 2010 3:15 am
First of all, I thought that the gift GIVER paid the taxes on gifts given over $13k per person per year.
Second, didn't there used to be a lifetime gift exemption?
Lastly, if both of these are untrue, wouldn't it seem that if a gift of say, $20k, required a tax payment of $6k, and then the gift giver paid the $6k, that the $6k would be taxed too, perhaps coming to $1.8k, and then if that were to be covered, it too would have to be taxed as income...
The only way to end the cycle is to pay some of your own taxes. I know it doesn't work that way, but theoretically, should or shouldn't it?
Second, didn't there used to be a lifetime gift exemption?
Lastly, if both of these are untrue, wouldn't it seem that if a gift of say, $20k, required a tax payment of $6k, and then the gift giver paid the $6k, that the $6k would be taxed too, perhaps coming to $1.8k, and then if that were to be covered, it too would have to be taxed as income...
The only way to end the cycle is to pay some of your own taxes. I know it doesn't work that way, but theoretically, should or shouldn't it?
-
Robert Muir
- Posts: 280
- Joined: Thu Jul 22, 2010 10:15 pm
Oprah's "gifts" don't fall under the $13k gift exemption. They fall under the sweepstakes type of scheme. The corporation writes off the "gift" and thus doesn't pay taxes. The recipient receives a 1099 form and must declare the value of the prize as income.
As KevinW mentioned, Oprah got burned, publicity-wise, in the "free" car giveaway a few years ago. The cars were provided by the manufacturer and after the bad publicity, she announced that her company would cover the cost of the income taxes. I don't know if she issued them a 1099 for the cost of paying for the income tax.
The cool thing from the perspective of the company providing the prizes is that they get to write off the full MSRP of the prize. So if the prize cost the company $10,000 to build, but the MSRP is $20,000, they'll issue a 1099 for $20k and deduct that amount from their taxable revenues.
As KevinW mentioned, Oprah got burned, publicity-wise, in the "free" car giveaway a few years ago. The cars were provided by the manufacturer and after the bad publicity, she announced that her company would cover the cost of the income taxes. I don't know if she issued them a 1099 for the cost of paying for the income tax.
The cool thing from the perspective of the company providing the prizes is that they get to write off the full MSRP of the prize. So if the prize cost the company $10,000 to build, but the MSRP is $20,000, they'll issue a 1099 for $20k and deduct that amount from their taxable revenues.
As a CPA, I've wondered how they handle it. If it is truly a gift from Oprah to the audience, she would have to own the stuff and give it to them and cover the tax on the value over $13,000 for each person. In that case, it's not taxable to the recipient, just like getting Christmas gifts isn't taxable.
My guess is the companies just give the stuff directly to the audience and thus the people get a 1099 for a prize/award which is taxable similar to lottery winnings.
My guess is the companies just give the stuff directly to the audience and thus the people get a 1099 for a prize/award which is taxable similar to lottery winnings.