Friday, April 22, 2005
Oprah's Tax Problems Redux: Can 5k Checks to 100 Employees Be Treated as Gifts Rather Than as Income?
Last year, we shamelessly blogged the tax consequences of Oprah Winfrey's giveaway of 276 new Pontiac G-6s to her studio audience in celebration of the 19th season of her talk show (see here, here, and here), culminating in Jon Stewart's hilarious spoof on The Daily Show).
With Tax Profs now in full exam prep mode and desperately looking for diversions, Howard Chapman (Chicago-Kent) sparked a spirited discussion on the TaxProf Discussion List yesterday when he recounted media reports that at an April 10 party celebrating O, The Oprah Magazine's 5th anniversary, Oprah gave $5,000 personal checks to 100 employees. The media reports note that having learned from the Pontiac episode, she wanted the employees to net $5,000 so she wrote the checks from her personal account:
Oprah told her grateful underlings: "I figured I would give you five things you could really use." Best of all, the bonuses were tax-free.
According to an interview on Good Morning America, it appears that Oprah's tax position is based on treating the payments as gifts within the 11k annual exclusion. But there appears to be no authority for treating the payments as non-taxable gifts rather than as taxable compensation.