Hooray for Hollywood! Filmmaking's elite gather Sunday, March 4, for presentation of the 90th Oscars.
The gold-plated statuettes will be given to winners in 24 categories, but many more Academy Awards attendees will take home goodies.
Yes, it's swag bag time! This has been a tax issue for a dozen years.
Back in 2006, the Internal Revenue Service and the entertainment industry finally got together to make sure everyone knew the tax rules and provide me with one of my best headlines ever: IRS makes call on booty.
So what exactly is the deal with so-called gift bags given out not only in connection with the Oscars, but all big awards shows?
"Everybody Wins" goodies: The 2018 Oscars gift bags were, for the 16th year, put together by Los Angeles-based niche marketing company Distinctive Assets.
Dubbed "Everyone Wins" bags, they've already been distributed to the actors in the leading and supporting role categories who are hoping to be official winners on March 4.
This year's bag contains 56 items, up from 41 in 2017, and is valued at more than $100,000, notes Wood. The swag ranges from exotic vacations to diamond jewelry to a variety of edibles to underarm sweat patches. Hey, who knows what star might find most appealing?
IRS wins, too: The taxation of those items has been well-covered and grudgingly accepted by the bag recipients.
If they forget to tell the IRS about the goodies when they file, Wood notes that they'll receive Form 1099s reporting the value of each item in the swag bag. And the IRS gets a copy of the form, too.
That's something all us much, much less famous taxpayers need to remember, too.
As Wood writes:
Celeb or not, if you get a gift bag, you have taxable income equal to its fair market value. Can't you argue this was a "gift" so it isn’t income? Hardly. These merchants don’t give them solely out of affection or respect. And though the value of these goodies really isn't pay, you must report it on your tax return.
Just something to remember now and when you finally make it big.
And when that time arrives, don't forget to thank your spouse and all the little people who helped you along the way!
You also might find these items of interest:
- Oscars, tax breaks and best tax-themed films (2017)
- NY leads Oscars with 9 nominated films that got Empire State tax breaks
- The Golden Globes kicked off 2018's entertainment awards — and tax — seasons