More on Tax Consequences of Oscar Gift Bags

This month's "Shop Talk" column in the Journal of Taxation discusses an issue we have previously blogged:  the tax consequences of gift bags received by celebrities at the Oscars.  Pre-Oscar publicity estimated the value of the bags at $100,000, and IRS Commissioner Mark Everson announced that the gift bags constitute taxable income to the celebrities who received them:

The Commissioner of the Internal Revenue Service today wished the Academy Award nominees the best of luck at Sunday’s presentation, but he reminded celebrity recipients of the six-figure goodie bags that they qualify as taxable income and must be reported on tax returns.

Of course, several tricky tax issues remain, as illustrated by George Clooney's well-publicized contribution of his goodie bag to the United Way.  The bag was auctioned off by the United Way on its web site, with the proceeds used to benefit hurricane victims.  Despite the publicity generated by the auction (here and here), and the cachet of having the bag associated with Clooney, it generated a winning bid of only $45,100, far less than the estimated $100,000 value.

Shop Talk raises a number of interesting issues, including:

• Is Clooney's income on the receipt of the bag $100,000, $45,100, or some other amount?
• Is Clooney's charitable deduction on the donation of the bag $100,000, $45,100, or some other amount?
• Does the auction of Clooney's bag establish the fmv of the bags received by others at the Oscars?  Can the IRS argue that their income is higher?  Can the other recipients argue that their income is lower because their celebrity pales in comparison to Clooney's?

For prior TaxProf Blog coverage, see:

• IRS at the Oscars (3/4/06)
• Celebrity Tax Lore:  The Oscars (3/1/06)
• Tax Consequences of Holloywood Swag (2/16/06)