IRS Benefits From the Oscars

The IRS may not get an Oscar from the Academy Awards, but they are definitely winning something from the big evening. Recipients of an Academy Award will ultimately make more money. And while the Oscar itself isn’t taxed, the “free” gifts the stars receive from attending will be taxed.

The IRS will send stars a 1099 in the mail reporting the value of the free gifts received and you will be taxed on that amount. You cannot successfully argue that the bag was a “gift” because the organizations and merchants do not give them solely out of affection or respect. If the stars donate gift bags to a qualified charity, they can take a charitable deduction, but they still have to report the fair market value of the gifts on their tax return. Organizations and vendors who distribute the gift bags likely have to report the value of what they included in the bags.

See Robert W. Wood, Biggest Winner at Oscars? IRS, Forbes, Feb. 25, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.