The Academy Awards goodie bag gravy train has pulled into the Hollywood station for the last time. All passengers, please take care not to scuff your Jimmy Choos and Bruno Maglis as you exit to the platform.
The IRS announced Thursday that the tax agency and the Academy of Motion Picture Arts and Sciences "reached a mutually satisfactory agreement that will resolve outstanding tax responsibilities with respect to Academy Awards gift baskets."
If you recall (and if you don't, you can read about it in the Award tax alert section of this earlier posting), the IRS raised questions about the taxability of gift baskets given Oscar presenters and performers at this year's event. The IRS position: The swag was payment for doing a job at the ceremony, ergo taxable.
I guess the government lawyers were convincing, since the Academy decided to hand over an undisclosed amount of moola to cover the taxes due on all the swag. It's safe to bet it was enough to finance several top-notch independent films, since the money covered all the goodies handed out since the practice was started, which, according to the Academy, was in the early 1970s, up through 2005.
As for the folks who got a gift bag this year in place of or in addition to an Oscar statuette, the Academy's accounting office will be sending each of them a 1099 form detailing the amount upon which they owe taxes. George Clooney reportedly got goodies valued at $100,000 and that was before he stashed his trophy for his supporting role in "Syriana" in the bag.
Looks like some LA CPAs will be busy come filing season, searching for deductions to offset their celebrity clients' unanticipated income.
But stars won't have to worry about that any more. The New York Times reports that in the wake of the booty tax boondoggle, the Academy has decided to forgo such gifts at future ceremonies.
Watching television presenters: With the Hollywood film contingent vanquished, the IRS now is turning its attention to other awards.
There are the Golden Globes, Screen Actors Guild, the music industry's Grammys and filmdom's Independent Spirit Awards, all of which lavishly stuff their own gift baskets with tens of thousands of dollars' worth of donated products. Up next, on Aug. 27, is the Academy of Television Arts and Sciences annual Emmys presentation.
The Wall Street Journal's Law Blog reported earlier this week that the New York Post's Page Six column (don't you just love this gossipy attribution trail?) said that the television awards organization sent letters to presenters and nominees advising them they will be responsible for paying income taxes on the freebies in their gift sacks, worth between $27,000 and $33,000.
The celebrities were asked to sign and return a letter acknowledging that they understand their tax responsibilities. If they don't, they won't get the booty bags, which include such items as Dooney & Bourke luggage, Fresh skincare products, Dove chocolates, and a variety of globe-spanning vacations. Yahoo Entertainment has a full bag breakdown here.
Sure, it's no fun to have to pay Uncle Sam, but all in all, the actors and celebrities can't really complain. They're getting pretty good "pay" for a couple of hours "work."