Forbes, IRS Is Coming After Tom Brady's Super Bowl MVP Truck, by Ryan Ellis:
The world champion New England Patriots will celebrate with the city of Boston today in the now customary duck boat parade downtown. It would be fitting if an IRS agent was waiting for quarterback Tom Brady at the end of the route.
Specifically, he might want to talk about Brady’s new truck. You know, the 2015 Chevy Colorado he won as Super Bowl MVP. The same truck Brady wants to hand over to Patriots rookie cornerback Malcolm Butler, who won the Super Bowl on a last second interception.
The truck is considered a taxable prize under the Internal Revenue Code, section 74. It’s taxed at Tom Brady’s marginal income tax rate of 39.6 percent. ... Tom Brady will pay ($34,000 x 39.6 percent) in taxes, or $13,500 in income tax on this prize. ...
According to ESPN, Brady has decided to gift the truck to Patriots rookie cornerback Malcolm Butler, who made the game-clinching interception on Sunday night. This is not a taxable event at all for Butler–gifts are never taxed to the recipient.
Brady is not so lucky. He’s going to have to pay gift tax on this transaction. The tax code only allows you to give $14,000 tax free from any one person to any one person before assessing a donor level tax on the gift.
Assuming this will be Brady’s only gift to Butler this year, the transaction sets up a taxable gift for Brady of $20,000 (the $34,000 value of the truck minus the $14,000 gift tax exclusion). Assuming Brady has made [$5.43] million of taxable gifts up to this point in his life (a safe bet), he will owe a 40 percent gift tax on this $20,000 taxable gift. That’s an $8000 gift tax on top of a $13,500 income tax on the truck, for a combined federal tax hit of $21,500.