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Oscar Guests Received $100,000 Gift-Bags

So, would, say, the guy who won the Billion iTunes song have to pay tax on all the iPods he won?

Can someone explain the difference between tax in the UK and US? Here (UK) it's simply VAT added to things you purchase (at 17.5%).
 
Taxation is a strange beast. I could win millions on the uk lotto, and not pay a penny tax on the initial win, but, put it in a bank, and then id earn interest, and pay tax on it too. ( i think, going from memory here). I could win a £100,000 scratch card paid out immediately, and not pay tax,,,,
but i could win a £1000 a week for a yea card, and pay tax on it.

i could win a car, and not pay tax on it. Tax is a strange expensive corn eating beast.
 
FearFactor47 said:
So, would, say, the guy who won the Billion iTunes song have to pay tax on all the iPods he won?

Can someone explain the difference between tax in the UK and US? Here (UK) it's simply VAT added to things you purchase (at 17.5%).
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Yes, he's gonna have to pay tax on all of that... 10,000 songs ($9,900) + 10 iPods ($4,490) + an iMac ($2,000? I am guessing) = roughly $17,000, so his tax bite could be a few thousand dollars. Then again, I think I read that he's a minor (17 years old?), so his prize value may be added to his PARENTS' income and they'll have to factor that into their income tax.

We don't have a nationwide VAT here... most states have a sales tax, and many localities also have an additional sales tax, which is added to the price of most things that you buy. (Other places do not have sales tax. Remember, the US is 50 united states, each of which are allowed to make their own laws, as long as they do not violate Federal law.) Of course, there are many exceptions... depending on the locality, groceries might be tax-free, or a car might be taxed at a different rate (here in NC, it's called a "road use tax" and it's only 2%, rather than the 7.5% sales tax we pay here in Charlotte). You don't pay sales tax on a house (usually), but you do have to pay property taxes on a house or a car each year (usually). Again, this varies wildly from state to state and locality to locality; some states have welcomed businesses (Delaware, for example) or retirees (Florida) by shaping their tax structure to favor certain groups or entities.

Confused yet? :)
 
KingSleaze said:
Last year, I won a car. GM 'Hot Button' promotion. Hey, great, I got a new car.
I had to pay state sales tax to be able to pick it up. $4000.
I got a tax statement from GM. The car is valued at $21,644 worth of income to me (and that much of a write-off for them).
I've got to pay roughly additional $8000 to federal and state income tax, because no money was withheld in the claiming of the prize.

That car made up about 1/3 of my income for last year. Pity, I can't claim it's a gift and that GM actually made more money off of giving me the car as part of the contest promotion.

Sucks to win a car. (BTW, actual retail price is higher than what GM is dunning me for, fair market value, blah, blah, blah)

So, sure. Tax those 'gift' bags.
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:( There's no limit to the government's greed. If they can tax it, they will tax it.
 
Since I didn't get a definitive answer to my post earlier about whether cash could be added to the gift bags to cover the taxes, I called a CPA and asked.

The answer is that corporations can, and indeed do, add cash to an amount paid to an individual to cover taxes on that amount. It is sometimes called "grossing it up", because it raises the gross amount paid to reach a certain net amount after taxes.

If you want to pay somebody in the 30% marginal tax bracket enough to cover the taxes on $100,000, you must add 100000x0.3 + 100000x0.3^2 + 100000x0.3^3 + ..., which is an infinite sum if not rounded off at each term. It converges to base_amount / ( 1/taxrate - 1 ), or in this case 100000 / ( 1/0.3 - 1 ) = 100000 / ( 3.3333 - 1 ) = 100000 / 2.3333 = $42,857.76, the same number I computed earlier.

So now we know. And I can sleep peacefully tonight.
 
Doctor Q said:
Since I didn't get a definitive answer to my post earlier about whether cash could be added to the gift bags to cover the taxes, I called a CPA and asked.

The answer is that corporations can, and indeed do, add cash to an amount paid to an individual to cover taxes on that amount. It is sometimes called "grossing it up", because it raises the gross amount paid to reach a certain net amount after taxes.

If you want to pay somebody in the 30% marginal tax bracket enough to cover the taxes on $100,000, you must add 100000x0.3 + 100000x0.3^2 + 100000x0.3^3 + ..., which is an infinite sum if not rounded off at each term. It converges to base_amount / ( 1/taxrate - 1 ), or in this case 100000 / ( 1/0.3 - 1 ) = 100000 / ( 3.3333 - 1 ) = 100000 / 2.3333 = $42,857.76, the same number I computed earlier.

So now we know. And I can sleep peacefully tonight.
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I remember reading that when Oprah (well GM) gave away Pontiac G6s to the whole audience, she took care of the tax bill. I guess she used your formula above.
 
i guess this is a similar situation to when Oprah gave all the members of the audience a brand new Pontiac (or something equivilant). Turns out the IRS is a dedicated Oprah viewer and all the audience members got slapped in the face with the tax bill!

At least a car is fairly easy to sell. A $100000 goody bag is slight more tricky though... :D
 
Here's an insane and outrageous concept: Give the multi-million dollar stars a ticket to Uganda and $100,000 to donate there. That would be newsworthy and actually good publicity for the Academy, who could use it right now.
it would also be a write off, wouldn't it?
 
I think I'm going to stop entering all those stupid free contests now. I haven't won yet and now I don't want to....
 
QCassidy352 said:
:( There's no limit to the government's greed. If they can tax it, they will tax it.
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Not greed - it's to stop the greedy. Otherwise payment in-kind would rule the roost. "We will pay you $50 Mr. Cassidy, that way you will owe no taxes. As a benefit, we will give you this $500,000 home." Come Christmas "There are no bonuses this year, but everybody should enter our one card monty game, where everybody who guesses right gets a free car!"
 
To US residents-
Remember when we were reading about how a general name George Washington led a revolution against King George II of England because he was taxing the residents of the American Colonies at an exteremely high rate? It was 2%.
They were furious about having to give 2% of their income to a government. Now, we pay up to 40%. American government- have fun trying to find my cash.
 
News link

The IRS has cracked down and ruled that all gift bags are fully taxable. So the groups, like the Academy of Motion Picture Arts & Sciences, who give out these gifts may cut way back on them.

And those who receive them from now on may have to sign a form acknowledging that they understand that they are responsible for the taxes, so they can't claim they didn't know about it.
 
QCassidy352 said:
:( There's no limit to the government's greed. If they can tax it, they will tax it.
Click to expand...


Wait. So the star with a multi-million dollar salary getting a $100,000 dollar bag full of overpriced lace and bits of metal is not the greedy party? And the government, who (tries/d) to provide services to the general public (not saying they are good at it or even do- just saying that they try or at least put up a pretense of trying) is greedy for applying tax laws already in existance?


Hmmm...
 
edesignuk said:
I just love the fact that people who can afford to pay for stuff, never actually have to.

It's the same with big execs of companies, they get massive pay packets and bonuses, then the company pays for everything anyway.

Great :rolleyes:
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And on top of that, Resident Bush passed a law so that vehicles purchased that weigh more than 7500 pounds (Hummers, massive SUV's) are allowed to be completely written off of your taxes and all in the same year. It's like they're encouraing the buying of huge gas-guzzling vehicles.
 
got to love gift taxes. In about 2 years I going to have to pay some taxes on my car when my parents "give" it to me for gradutating collage. Right now the car is in there name but when I get out of school they are going to pay it off the loan and then give the car to me. The bad part is that it going to be over the gift tax limit on the gift and I am going to have to pay some on it. Even though I already am the one who insured as the primary driver and I pay for most of the maintaince on the car. It is just not in my name yet. Got to love the law and all.
I might be a little more protect because I still claimed as a dependent on taxes so that might protect me from the gift tax because I still be under that claim when the car is transfered.
 
quigleybc said:
If people keep pirating movies, then next year the bag might only be worth $50,000....now that would be a crime...:eek:
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too bad the guy who fixes cameras for big movies doesn't get a gift bag.......
 
hookahco said:
To US residents-
Remember when we were reading about how a general name George Washington led a revolution against King George II of England because he was taxing the residents of the American Colonies at an exteremely high rate? It was 2%.
They were furious about having to give 2% of their income to a government. Now, we pay up to 40%. American government- have fun trying to find my cash.
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It was the lack of representation part that got everyone pissed off, not the tax itself. Read a damn history book.
 
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