So NOT Right!

[Diamonds4Me]

Ellen just gave away a Hearts on Fire diamond necklace to everyone in her audience today!!!!!

 

[canuk-gal]

HI:

Sounds great until they get a tax bill from Uncle Sam......When I first heard about the car giveaway on Oprah I thought "how generous, then immediately realized oh no tax implications"....sure enough the elation was followed by an angry outcry from audience members who did not want the close to 30K added to their income...I expect some gave the cars back to Ford
But it is the thought that counts....right????

cheers--Sharon

 

[fire&ice]

Date: 12/10/2004 10:42:34 AM
Author: canuk-gal
HI:

Sounds great until they get a tax bill from Uncle Sam......When I first heard about the car giveaway on Oprah I thought ''how generous, then immediately realized oh no tax implications''....sure enough the elation was followed by an angry outcry from audience members who did not want the close to 30K added to their income...I expect some gave the cars back to Ford
But it is the thought that counts....right????

cheers--Sharon

Nope, not a one according to a follow up. Some did choose to sell their car though.

Death & taxes.

 

[Diamonds4Me]

Yikes! That is very true! I guess people that are that wealthy don''t really think about a pidley $30K.......

 

[i_like_tiffany_please_dont_hate_me]

so far as I am aware, in the UK gifts are free of taxation - unless this govt has put a tax on gifts now

would that law apply to Christmas/birthday/anniversary presents too?

 

[MrsFrk]

Date: 12/10/2004 1

5:51 PM
Author: diamondgeezer
so far as I am aware, in the UK gifts are free of taxation - unless this govt has put a tax on gifts now

would that law apply to Christmas/birthday/anniversary presents too?

SHHHHH. Don''t give your government any ideas!

No, the law doesn''t apply to gifts if they are from family. Free gifts from an Oprah or Ellen are considered income, and are taxed. You can gift cash up to a certain amount to a family member, but the definition of family is pretty narrow, so that people can''t shift property and cash to non-family in an effort to avoid paying estate or capital gains taxes.

The cars were from Pontiac- guess it didn''t work very well as an advertising gimmick, huh!?

 

[abradabra]

Gifts are not taxed to the recipient under US tax law, however, if they are categorized as a "prize" of some sorts, they would be taxable. Also, gift givers must pay taxes on gifts given that exceed $11,000/per person. You have a lifetime limit that you can also go against (it''s large, but not that large, when you consider your bequests at death are counted in this limit), so you may not pay taxes this year, but you will eventually. Christmas presents, birthday presents, etc. are all included in these totals. (The CPA review course I took last year said even ENGAGEMENT RINGS are subject to the annual $11k limit, but who really follows that rule?)

The problem is that for someone like Oprah or Ford or Hearts on Fire to avoid paying taxes (and in the case of the companies, to reduce their income), the gift giver can try treat the gift like a prize (I''m not sure of the exact rules, but they would have to structure the transaction so it would be more like a prize). In which case the audience member would have income and have to pay taxes on it. Nothing like bumping someone into a higher tax bracket to show how generous you are....

 

[abradabra]

You can give gifts to non-family members without adverse consequences. I don''t have the language in front of me, but there was a court case, I forgot the name, a number of years ago where a businessman received a car as a Christmas gift from someone he did business with. The company wrote it off and he wanted to treat it as a gift. Anyway, the businessman had to treat the car as income because he wouldn''t have received it without sending business to the company (that being said, it wasn''t part of his compensation for sending business their way either). The case developed specific terminology which I can''t rattle off at the moment that defines what it means to give a gift--basically you have to do out of your own will, not to receive anything in return, etc. It isn''t limited to family members or friends. But it is specific.

 

[Diamonds4Me]

Date: 12/10/2004 1:17:40 PM
Author: abradabra
(The CPA review course I took last year said even ENGAGEMENT RINGS are subject to the annual $11k limit, but who really follows that rule?)

Uh oh...hope my cpa isn''t reading this

Date: 12/10/2004 1:17:40 PM
Author: abradabra
Nothing like bumping someone into a higher tax bracket to show how generous you are....

I hate when that happens!

 

[abradabra]

Date: 12/10/2004 1:28:30 PM
Author: Diamonds4Me

Date: 12/10/2004 1:17:40 PM
Author: abradabra
(The CPA review course I took last year said even ENGAGEMENT RINGS are subject to the annual $11k limit, but who really follows that rule?)

Uh oh...hope my cpa isn''t reading this

I don''t know anyone who as ever followed this rule. Maybe someone like Donald Trump would have to because his engagement is so public, but the IRS isn''t going to try to enforce this one. As an aside, if you get married in the same year you are engaged, you don''t have to pay taxes on it because you have unlimited marital transfers of property/money without tax consequences and if you are married on Dec. 31, they consider you to have been married all year...