Nothing is For Free With the IRS
Those goody bags Oscar presenters receive aren't tax free gifts anymore.
"The gift basket industry has exploded, and it's important that the groups running these events keep in mind the tax consequences," said IRS Commissioner Mark W. Everson in announcing the tax agency and film industry has reached an agreement on Oscar goody bags.
Oscar presenters walk off with over $35,000 worth of goodies in their gift bags, including a $25,000 four night stay at Honolulu's Halekulani Resort. But tucked deep in that bag will be a nice letter from the IRS.
In fact, the Academy of Motion Picture Arts and Sciences first contacted the IRS voluntarily due to the high value of the goody bags this year. The Academy was concerned with any potential tax issues for this year and previous years.
The Academy and the IRS have settled the tax obligations for all gifts through 2005, though no details were given as to how. Recipients of this year's gift basket will be issued informational tax forms by the Academy and will be responsible for their own income tax obligations.
It doesn't seem as if the "gift" should be taxed. After all, the goddies are given by the hotels, designers and manufacturers as a homage.
But the IRS says that at this level of cost, the gift bags have public relations value. This is business, according to the agency. The only option the stars have, according to an IRS spokesman, is to donate the gifts to a qualified charitable organization. If they do, they may be able to take a tax deduction, subject to the usual applicable limitiations and requirements.
This will affect many more people than just the Oscar stars. Celebrity fundraiser goody bags, celebrity golf, charitable organization and other entertainment events will all be handing out tax bills with their goody bags. The IRS is notifying all entertainment and charitable organizations that they must issue 1099-MISC forms at the end of each year to each celebrity or recipient of expensive gift baskets.
Those who wish to avoid the taxes must return the gift basket and have written proof of return.
What is taxable now? Everything recieved at a fundraiser -- from things in goody bags, items picked up at a free shopping table to rooms given as a courtesy. Even gift certificates and vouchers are taxable.
And if you are a celebrity and receive a free outfit to wear to an event, you are going to have to pay taxes on it. You will be taxed on the fair market value of the gift. Don't forget to keep track of all the goodies you receive during the year.
"The gift basket industry has exploded, and it's important that the groups running these events keep in mind the tax consequences," said IRS Commissioner Mark W. Everson in announcing the tax agency and film industry has reached an agreement on Oscar goody bags.
Oscar presenters walk off with over $35,000 worth of goodies in their gift bags, including a $25,000 four night stay at Honolulu's Halekulani Resort. But tucked deep in that bag will be a nice letter from the IRS.
In fact, the Academy of Motion Picture Arts and Sciences first contacted the IRS voluntarily due to the high value of the goody bags this year. The Academy was concerned with any potential tax issues for this year and previous years.
The Academy and the IRS have settled the tax obligations for all gifts through 2005, though no details were given as to how. Recipients of this year's gift basket will be issued informational tax forms by the Academy and will be responsible for their own income tax obligations.
It doesn't seem as if the "gift" should be taxed. After all, the goddies are given by the hotels, designers and manufacturers as a homage.
But the IRS says that at this level of cost, the gift bags have public relations value. This is business, according to the agency. The only option the stars have, according to an IRS spokesman, is to donate the gifts to a qualified charitable organization. If they do, they may be able to take a tax deduction, subject to the usual applicable limitiations and requirements.
This will affect many more people than just the Oscar stars. Celebrity fundraiser goody bags, celebrity golf, charitable organization and other entertainment events will all be handing out tax bills with their goody bags. The IRS is notifying all entertainment and charitable organizations that they must issue 1099-MISC forms at the end of each year to each celebrity or recipient of expensive gift baskets.
Those who wish to avoid the taxes must return the gift basket and have written proof of return.
What is taxable now? Everything recieved at a fundraiser -- from things in goody bags, items picked up at a free shopping table to rooms given as a courtesy. Even gift certificates and vouchers are taxable.
And if you are a celebrity and receive a free outfit to wear to an event, you are going to have to pay taxes on it. You will be taxed on the fair market value of the gift. Don't forget to keep track of all the goodies you receive during the year.
Those goody bags Oscar presenters receive aren't tax free gifts anymore.
"The gift basket industry has exploded, and it's important that the groups running these events keep in mind the tax consequences," said IRS Commissioner Mark W. Everson in announcing the tax agency and film industry has reached an agreement on Oscar goody bags.
Oscar presenters walk off with over $35,000 worth of goodies in their gift bags, including a $25,000 four night stay at Honolulu's Halekulani Resort. But tucked deep in that bag will be a nice letter from the IRS.
In fact, the Academy of Motion Picture Arts and Sciences first contacted the IRS voluntarily due to the high value of the goody bags this year. The Academy was concerned with any potential tax issues for this year and previous years.
The Academy and the IRS have settled the tax obligations for all gifts through 2005, though no details were given as to how. Recipients of this year's gift basket will be issued informational tax forms by the Academy and will be responsible for their own income tax obligations.
It doesn't seem as if the "gift" should be taxed. After all, the goddies are given by the hotels, designers and manufacturers as a homage.
But the IRS says that at this level of cost, the gift bags have public relations value. This is business, according to the agency. The only option the stars have, according to an IRS spokesman, is to donate the gifts to a qualified charitable organization. If they do, they may be able to take a tax deduction, subject to the usual applicable limitiations and requirements.
This will affect many more people than just the Oscar stars. Celebrity fundraiser goody bags, celebrity golf, charitable organization and other entertainment events will all be handing out tax bills with their goody bags. The IRS is notifying all entertainment and charitable organizations that they must issue 1099-MISC forms at the end of each year to each celebrity or recipient of expensive gift baskets.
Those who wish to avoid the taxes must return the gift basket and have written proof of return.
What is taxable now? Everything recieved at a fundraiser -- from things in goody bags, items picked up at a free shopping table to rooms given as a courtesy. Even gift certificates and vouchers are taxable.
And if you are a celebrity and receive a free outfit to wear to an event, you are going to have to pay taxes on it. You will be taxed on the fair market value of the gift. Don't forget to keep track of all the goodies you receive during the year.
"The gift basket industry has exploded, and it's important that the groups running these events keep in mind the tax consequences," said IRS Commissioner Mark W. Everson in announcing the tax agency and film industry has reached an agreement on Oscar goody bags.
Oscar presenters walk off with over $35,000 worth of goodies in their gift bags, including a $25,000 four night stay at Honolulu's Halekulani Resort. But tucked deep in that bag will be a nice letter from the IRS.
In fact, the Academy of Motion Picture Arts and Sciences first contacted the IRS voluntarily due to the high value of the goody bags this year. The Academy was concerned with any potential tax issues for this year and previous years.
The Academy and the IRS have settled the tax obligations for all gifts through 2005, though no details were given as to how. Recipients of this year's gift basket will be issued informational tax forms by the Academy and will be responsible for their own income tax obligations.
It doesn't seem as if the "gift" should be taxed. After all, the goddies are given by the hotels, designers and manufacturers as a homage.
But the IRS says that at this level of cost, the gift bags have public relations value. This is business, according to the agency. The only option the stars have, according to an IRS spokesman, is to donate the gifts to a qualified charitable organization. If they do, they may be able to take a tax deduction, subject to the usual applicable limitiations and requirements.
This will affect many more people than just the Oscar stars. Celebrity fundraiser goody bags, celebrity golf, charitable organization and other entertainment events will all be handing out tax bills with their goody bags. The IRS is notifying all entertainment and charitable organizations that they must issue 1099-MISC forms at the end of each year to each celebrity or recipient of expensive gift baskets.
Those who wish to avoid the taxes must return the gift basket and have written proof of return.
What is taxable now? Everything recieved at a fundraiser -- from things in goody bags, items picked up at a free shopping table to rooms given as a courtesy. Even gift certificates and vouchers are taxable.
And if you are a celebrity and receive a free outfit to wear to an event, you are going to have to pay taxes on it. You will be taxed on the fair market value of the gift. Don't forget to keep track of all the goodies you receive during the year.
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