Oscar Attendees Face Tax Charges of Up to $140K for Gift Bag

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It’s widely known that one of the biggest perks of attending an award show is the gift bag you get when it’s time to go home. While the Oscars gift bag is filled with high-priced, glamorous items and other goodies, did you also know that tax must be paid by the recipients?

Why Celebs Should Pay Taxes for Gift Bags

As with everything Hollywood has, VIP sections are available for purchasing gift bags. Only a few people attended, including five nominees for each of the acting categories. “Best Director”The bag contained goodies valued at $137,000. 

It contained items such as gold-infused olive oils, $10,000 worth plastic surgery, and all-expenses-paid travel to a Scottish castle. But, the gift bags come with strings: If you accept each item in the bag, then you have to also pay taxes. 

So, what makes the Oscars’ goodie bags taxable? According to the IRS website, the bags aren’t actually classified as gifts because they are not given ​​”solely out of affection, respect or similar impulses for the recipients.” 

“If you think about it as ‘what is the intent of providing those items, products or services?’, obviously it’s the hope that the celebrity is going to use that product, go on that vacation,” CNBC spoke with Eric Bronnenkant (head of tax at Betterment),. “They’re trying to influence behavior.”

After IRS scrutiny and concerns about the optics of gift bags that were subject to heavy taxation, the Academy stopped giving out gift bags in 2006 to performers and presenters. 

How to get around the heavy taxation

The Academy does not distribute gift bags to acting and directing nominees. Instead, Distinctive Assets distributes them. The recipients receive a form explaining to them that the gift is taxable. 

However, there are some loopholes in this process. The gift-bag recipients must accept the items. “Let’s say that Will Smith doesn’t go on the trip [to Scotland],” Lash Fary is the founder of Distinctive Assets.. “His bag isn’t worth $137,000; it’s worth $137,000 minus $50,000. If he doesn’t go to the Golden Door, that’s another $15,000 off. And if he doesn’t use the home renovation services from Maison Construction, that’s another $25,000 off.” 

Fary stated that no Oscar nominee has ever received a gift basket with the same value over the past 20 years. “A lot of the trips have gotten redeemed, but no one has ever redeemed every single thing.” While the super-expensive gift bags still seem pretty ridiculous to the general public, it’s nice to know that even celebrities have to worry about taxes. 

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