Friday, October 17, 2008
The annual award of the Nobel Prize provides a opportunity to provide students with a real life application of § 74(b). Paul Krugman will have to pay tax on the $1.4 million unless he gives the amount to charity, as outlined in Publication 525. See also Tax Policy Blog:
Basically, unless Krugman donates the money to an eligible charity, he must pay tax on it. And that's correct given that such an award is indeed Haig-Simons income.