Taxing Oscar Goody Bags

The IRS has reached an agreement with the Academy of Motion Picture Arts and Sciences that goody bags given to celebrities during the annual Academy Awards are considered taxable income for the recipient, and should be fully reported on the celebrities' tax returns. Mark Minassian, CPA, covers the details in his article, IRS Targets Celebrity Gift Bags, and explains why the IRS is cracking down on the gift bags now. So if you are dreaming, or day-dreaming, of receiving a coveted Oscar, you might want to review the instructions for Form 1040 Line 21, which is where you'll be reporting the fair market value of the goody bag you would receive.

In fact, Line 21 is where you report any prizes you win, such as winning a car in a sweepstakes. This is what happened to PoorGuy2, who laments that the taxes on a car he won has pushed him into tax debt. He even tried to do the right thing by asking a tax professional for help in estimating his tax bill, and trying to set up a monthly payment plan to pay off the IRS.