Friday, March 18, 2011
Crawford: Charlie Sheen's Oprah Tax Problem
Of all of the odd news concerning Charlie Sheen in recent weeks, one particular tidbit caught my tax-professor eye. The actor is holding a raffle for two tickets to his roadshow in Detroit on March 22, 2011. "Winner and guest will hang out with Charlie at the VIP after-party," the "WINNING for Charities Raffle" site proclaims here. The site also claims:
Gregg Polsky (North Carolina) notes in the comments: "The gross up payment amount does reflect that the payment itself is taxable. They value the total prize (including the tax payment) at $3,000; $750 reflects the 25% withholding rate on prizes. The "mitigate" language was used to reflect that, if the winner is subject to a marginal tax rate higher than 25%, the winner would owe additional tax on the prize."
- Winner will receive a cash prize in the amount of $907.50 to mitigate the Winner's tax liability that results from winning the raffle. This prize is withheld and paid, on behalf of the Winner, directly to the IRS ($750) and the Commonwealth of Massachusetts ($157.50).
https://taxprof.typepad.com/taxprof_blog/2011/03/crawford-charlie.html
Japan has taken Charlie Sheen off the front page, but he still remains an enigma to me. His initial behavior (what he said, the way he said it, his eyes) all seemed to me to be something more serious than something like substance abuse. It appeared to be some sort of mental illness where he had lost touch with reality.
Then comes the funny or die video (http://www.funnyordie.com/videos/bfb12aea47/charlie-sheen-s-winning-recipes?playlist=featured_videos) in which Sheen seems very lucid and even very consciously pokes fun at himself and his own behavior. (It is a must see.)
Now Sheen is taking into account tax issues associated with prizes he is awarding. Most people don't think about tax issues like this, let alone junkies or the mentally ill. I'd say that regardless of what has transpired before, grossing up for taxes is a definite sign of thoughtful, lucid behavior. I mean, I am sure that Sheen had someone (tax attorney/CPA) help him on the issue. But that he sought out tax advice so "Winning" would not leave the winner holding a tax burden must mean something.
I never thought that people thinking about tax might/would prove their sanity.
Posted by: tax guy | Mar 18, 2011 5:57:20 AM