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Finance & Accounting
Pages 3 (753 words)
Taxation policy and Gifts Name Institution Oprah’s audience giveaway Giving out 276 Pontiac G6 sedans was one of the most philanthropic gesture that Oprah had ever done to her audience. However, little did the audience understand that receiving the Pontiac G6 sedans was not a mere gift and a positive aspect for their lives…
Oprah’s gifts were already tax imposed at the time of purchase, and thus Oprah had in deed paid a substantial amount of VAT on the purchase of the sedans. However, the IRS law in Section 61 of the tax law of the United States stipulates that any addition to the gross income earned by any given individual is subject to taxation. This indicated that with the taxation limits for income earned limits, 28% of the overall value of the vehicles was official property of the IRS, of $28,000 value for the respective vehicles each member received. The audience was then left with a great deal of debt to the IRS, which required each of the gift recipients to pay a tax of about $7,000 if they chose to keep their cars. Alternatively, the audience could sell their vehicles and resultantly pay off their taxes with the cash earned, then keep their extra proceeds. One of the major cases in this case that was taken to court owing to a gift tax imposed on the recipient is the Sang J. Park and Won Kyung O v. Commissioner of Internal Revenue Service, where the IRS imposed tax on a gambling winner after just winning their gifts in a casino. ...
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