Oscar celebrities receive $205,000 in free gifts and pay 50% taxes


There are many different categories at the Academy Awards, and not all celebs are rewarded with prizes or even gifts. get some $60,000 worth of loot, but the top nominees will receive a jam-packed $205,000 gift bag. Gifts have a long tradition at the Oscars, and with good reason. Companies pay promoters to put their gear in gift bags for the stars to use, hopefully somewhere on camera. The companies pay a fee to donate the goodies, and the nominees get the expensive stuff for free. Everyone wants celebs to show off their gear, so of course companies write off the cost from their taxes. That’s a legitimate business expense, but it’s worth considering the recipient’s end as well. Some celebs turn down gifts, but why would anyone say no to free stuff? The celebs have to report the value of what they receive as income, and the taxes can also be high. How can donations be taxed as income? The answer is if they aren’t actually gifts. And the expensive items add up.

This year’s gifts were worth $205,000, according to the New York Times
This includes a holiday in the Pater Noster, a lighthouse converted into a hotel off the west coast of Sweden. 24k gold-plated vape cartridges from Hollowtips, a rescue hammer from PETA to rescue dogs left in hot cars, games from Exploding Kittens, a brain-recognizing headband from Muse, an anti-racist children’s book and an NFT from Adventure Media and Tallard Capital. The top federal tax is 37%, although it could go up, and then there’s the California tax, which sits at 13.3%. For many, the total exceeds 50%, especially since you can only deduct $10,000 in state taxes.

There’s a lot more, and everything is taxable even if it’s not provided in cash. In 2006 the academy was discontinued officially Giving gifts due to IRS audit, so gifts are now not officially part of the academy. For years, the entertainment industry and the IRS have argued over the tax treatment of these “gifts.” Eventually, the tax disputes were settled, with Swag clearly taxable and celebs receiving IRS Forms 1099. And it’s not just celebrities. So if you receive a gift bag, you have taxable income equal to its fair market value. Can’t you argue that this was a “gift” not income? With family sure, but not in this context as these traders don’t just give them out of affection or respect. Although the value of these treats really isn’t a reward, you still need to declare it on your tax return. If attendees forget to do this, they will receive an IRS Form 1099 reporting this, and these 1099 forms are key to your taxes. If you don’t report it, it can get ugly with IRS tax bills and penalties.

How about gift vouchers or vouchers for travel or personal services? If you redeem the vouchers or vouchers, state the market value of the trip or service in your tax return. When you make a choice in a “free shopping room,” the value of your choice is also income. Still, some celebs continue to give away the bags or turn them down. You can claim a charity contribution deduction if you donate the gift bag to a qualifying charity. However, the fair market value of the gifts must still be declared in the tax return. That’s where refusing treats raises weird tax issues. If you refuse a bonus from your employer, it’s still income, according to the IRS. If you say pay me next year it’s still income when you were handed the bonus and asked to defer it. Organizations and vendors that distribute gift bags issue IRS Forms 1099-MISC. So why don’t celebs get a 1099 form for saying “thanks but no thanks”? A 1099 form identifies you with income. It can be difficult to untangle when you know your 1099 form is wrong.

Cash can also be at the Oscars. A few years ago, women’s clothing daily reported that Meryl Streep canceled a bespoke couture creation by Chanel after the fashion house refused pay her to wear to the Oscars. The $105,000 couture dress was already in production when Streep’s team reportedly said, “Don’t make the dress any further. We found someone to pay us.” A representative for Ms Streep denied that claim, saying it violated Ms Streep’s personal ethics to be paid to wear a dress on the red carpet. But stories about pay-to-play still pop up from time to time. That Daily Mail once remarked that it’s not uncommon for celebrities to make money by wearing dresses, jewelry and accessories to major awards shows. It has been reported that some have been paid as much as $250,000 to wear a dress on the red carpet. Swag or not, when a celebrity is paid to wear a dress to an event, can they just pocket the money or is it taxable? Like pretty much everything else, the IRS gets its share. And while the practice isn’t widely debated, there’s little doubt that designers paying the fees should issue stars with an IRS Form 1099 for the fee.

IRS Forms 1099 are also required for the Oscars gift bags. In the past, the Academy of Motion Picture Arts and Sciences sued Distinctive Assets for promoting the gift bags as “official” Oscar swag. The lawsuit alleged that “Distinctive Assets uses the Academy’s trademarks to raise the profile of their ‘gift bags’ and falsely imply an association, affiliation, connection, sponsorship and/or endorsement.” The dispute was settled amicably. If money was exchanged, the IRS likely got some of it, too, although litigation taxes often depend on the wording of the settlement. This is one of five IRS rules for taxing litigation settlements.


Comments are closed.