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One of the benefits of being nominated for an Oscar is the gift bag which, this year, was worth approximately $137,000. These bags were given to 25 nominees, including the five nominees in each of four acting categories, along with the five nominees in the “Best Director” category. Included in the gift bag is a coupon for $10,000 worth of plastic surgery, along with gold-infused olive oil. Any nominee who accepted the bag, though, may not realize that they’re also accepting a tax burden they may not want.
The reason behind that tax issue comes from the definition of what’s considered a gift, for tax purposes. “Gifts,” according to the law, are given solely out of respect, affection, or similar impulses. These recipients aren’t being given gift bags for any of those reasons, and that means the intent of the gift is what matters, much more than the gift itself. Instead of affection, the intent of the bags is to get celebrities to use particular products by influencing their behavior.
Because of that, the actual value of the gift bags will count as income on the tax returns of the recipients. While many celebrities have millions of dollars, and might not be concerned about the extra income tax they’ll be required to pay, they should still be aware of the implications of it. If they choose not to accept the gift bag, then they won’t have the additional tax to pay. That decision will likely come down to whether they believe they’ll be using the products in the bag.
For celebrities who aren’t interested in the products offered in the gift bag, the better option would likely be to refuse the gift. Just automatically taking it because it’s offered is going to cost them financially, and that’s a problem that can easily be avoided.
To learn more about more common estate planning concepts, work with an experienced estate planning attorney. Contact The Estate Planning & Legacy Law Center today to schedule a consultation!