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Taxation policy and Gifts - Research Paper Example
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…
Taxation policy and Gifts
Secondly, all game show winnings, such as the gesture illustrated by Oprah, are subject to taxation alongside gambling winnings, which is a little known fact to most civilians. 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.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. In the winnings, the taxation was imposed on all winnings made by the people, whereas in the reality, the plaintiffs argued that they had lost an equal amount to that which had won, and yet their winnings were taxed heavily, not even considering their respective incomes lost in the gambling processes. ...