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Taxability of Gift Bags


COLLAPSE
Excellent article about taxability on expensive gifts. First thought comes in mind is that gifts are not income so why tax. Well the IRS is looking for way to collect tax revenues with the least amount of fuss. So what is the taxable value of these gifts? According to IRS Gift Bag Questions and Answers: “In general, the person has received taxable income equal to the fair market value of the bag and its contents and must report that amount on his or her federal income tax return.”
The IRS is now notifying entertainment and charitable organizations that they must issue appropriate 1099-MISC forms at the end of each year to each celebrity or recipient of these expensive sets of gifts.
Reference: https://www.irs.gov/uac/gift-bag-questions-and-answers
2)Taxability of Gift Bags
COLLAPSE
I do not have any objections to gifts being taxable that are worth more than 600 dollars. In this case, celebrities are gifted for their nominations in categories. As stated in the article if they do not want to be taxed on these items the smart thing to do would be to not accept it or make arrangements to have this gift donated to a charity. In my honest opinion, celebrities getting these gifts are not necessarily concerned with this extra taxation as they are already making millions anyway.
For example in a article Anne Hathaway was taxed on goods given to her at the Oscars totaling up to $47,000. The gifts included a certificate for a face lift (worth 5,000) and an all expenses paid trip to Australia. These gifts are subject to taxes in the state that they were given and the federal rate of the taxpayer. When these are re-gifted to others they are in theory supposed to issue a 1099 so that the IRS can track it. As stated above though, it is my belief that this is the least of celebrities worries as they can afford the things in the gift bag on their own without it being gifted. In my honest opinion, I would not accept this gift if given the option or I would make prior arrangement to have this gift donated to charity upon receipt.



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