By Sam Brunson
Every year, it seems like there’s something in the news about the Academy Awards swag bags (valued at $100,000 this year!) and taxes. And, since the Academy Awards are tonight, and since this is a tax blog, we might as well say something about the taxation of swag bags. And wouldn’t you know it: an article had a decently bad take on the taxation, giving me a hook for a tweetstorm, which I now reproduce here for your reading pleasure. Happy Academy Awards Day!
I assume by now that everybody knows that #AcademyAwards2019 swag bags are taxable income to the recipients. But there are at least one thing in this article that needs to be corrected, and another than needs pushback. 1/ https://t.co/icqjcIlr9e
— Sam Brunson (@smbrnsn) February 24, 2019
First, @lashfary is just plain wrong here. There is no tax difference between receiving “physical gifts,” gift certificates, and trips. Whatever the lucky swag bag recipients gets is gross income to them. 2/ pic.twitter.com/fPV2LgTimA
— Sam Brunson (@smbrnsn) February 24, 2019
IRS. But the 1099-MISC doesn’t make the object in the swag bag taxable; it just informs the IRS that a taxpayer received taxable income. Whether or not the giver provides a 1099-MISC, if the swag bag contents are taxable, the recipient must pay taxes on the contents. 4/ pic.twitter.com/vUHCQMBueV
— Sam Brunson (@smbrnsn) February 24, 2019
agreement a number of years ago in which the Academy agreed to provide 1099s to swag bag recipients, and not to give swag bags going forward. I think that’s probably the right conclusion, but just wanted to highlight that it’s not unassailable.) 6/ pic.twitter.com/GqwcTlIc4s
— Sam Brunson (@smbrnsn) February 24, 2019
The second thing: it’s really hard for me to buy that the real winner here is the IRS. It’s not like the IRS keeps the tax revenue it collects. It’s not like the IRS will be richer as a result of collecting taxes on swag bags. 8/ pic.twitter.com/GEQJX54jNv
— Sam Brunson (@smbrnsn) February 24, 2019
One last thing: if swag bags are taxable income, is there any way to avoid having taxable income? Interestingly, according to an IRS ruling from 1957 (Rev. Rul. 57-374, if you care), if you refuse to accept the prize, you don’t have to pay taxes on it. 10/ pic.twitter.com/zxi5Giu7Yc
— Sam Brunson (@smbrnsn) February 24, 2019
(That’s actually kind of a weird rule, honestly, but it seems fair enough.)
And with that: happy #Oscars2019 everybody! And pay your taxes, swag bag recipients! 11/11 pic.twitter.com/jDOTg5BlZE
— Sam Brunson (@smbrnsn) February 24, 2019
The Surly Subgroup 