"D. Stussy" <kd6lvw[at]bde-arc.ampr.org> wrote:
- quote -

Only if you assume that these were gifts. They weren't.
They were not given based on love or affection, they were
not given for charitable purposes. They were given for
business purposes.

The code does not define "gift." But the courts have. And
the cars to Oprah audience members don't qualify under that
test.

Stu

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William Brenner wrote:
- quote -

.....And a reading of what I wrote comes to the conclusion
that what was done is wrong as compared to what the law
states. The Code may not unilaterally define either "prize"
or "gift," but in common usage there is a difference. She
may call it one thing, but for it to be that, there's a
missing characteristic and thus the problem.

- quote -

To counter the proposal that the classification of the
"Oprah transaction" should not be determined by its
treatment - classification determines treatment (but
everything I'm hearing in this newsgroup seems to be of the
former which is clearly wrong).

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Stuart A. Bronstein wrote:
- quote -

But ONLY a prize or award is taxable on account of Section
74. Gifts still aren't.

I am not disputing that prizes aren't taxable. I am
disputing that the transfer was a prize vs. a gift. Based
on the facts and circumstances that I have read about the
event ITSELF, I see a gift, not a prize.

A prize or award recipient generally has done something on
their own initiative to qualify or earn it. I don't see
what these people did. They showed up and received a car -
but they were invited to show up - and selected for
invitation by the actions of others NOT acting on their
behalf. That's no prize.

Oprah wanted to do something for a certain collection of
"underprivileged" people. That sounds like a gift.

- quote -

..... And you don't have a problem with the fact that
treating them as income is a direct contradiction of the
code itself?

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D. Stussy wrote:
- quote -

A careful, unbiased reading of my post would reveal that I
am not making an argument, but merely reporting the facts of
what happened.

I proffer no opinion as to the propriety of these actions,
but would venture a guess that Pontiac/GM and Harpo might
have been guided by their respective accounting departments
prior to taking them.

And I certainly do not advocate that your relatives be taxed
on your gifts to them -- or that you would/should write them
off. I cannot imagine where that came from.

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"D. Stussy" <kd6lvw[at]bde-arc.ampr.org> wrote:

- quote -

If it is from a charity it's part of their exempt purpose to
make payments out of detached generosity (that is, unrelated
to anything the recipient has done or might do and unrelated
to any other business purpose).

As far as government payments, I was under the impression
that they would be taxable but for specific exclusions in
the law.

- quote -

Under the code, prizes such as you describe are specifically
taxable. See section 74, 451(h)(2), 4945(g) and 274(e)(9).

- quote -

Actually, the courts would say you have an ulterior motive
aside from disinterested generosity, shown by your abortive
attempt to deduct the gifts, and thus treat them as income
(unless specifically exempt under the code).

Stu

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William Brenner wrote:

- quote -

According to that argument, public assistance (whether from
a private charity or a government agency) should be taxable
yet it is not.

It's not a matter of how they treated it. It's a matter of
should have they treated it differently. There is a
required but missing element in classifying it as a prize or
award.

If I decided to write off all my personal Christmas gifts to
my relatives in December, according to you, they should all
be paying income tax on it - meremly because I wrote them
off - ignoring the fact that there is no allowable deduction
for personal gifts at all.

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From a Google search of "Oprah's auto giveaway" (omit ""),
which yielded over 14,000 links, I was able to glean the
following from several seemingly responsible sources:

The cars were donated by Pontiac/GM, and therefore would
not have been entered, deducted or otherwise accounted
for by Oprah's company.

Pontiac/GM charged off the costs as promotional expense.
This appears to be proper since promotion of that model
car was their purpose.

The recipients were liable for federal tax on the
$28,000 MSRP.

Pontiac reimbursed the recipients for the sales tax and
any state/local income taxes they had to pay. The
recipients were liable for additional federal tax on
those amounts. (It got 'worser' and 'worser'.)

DISCLAIMER:
As you are well aware, I am a tax amateur -- except when
it comes to paying same. All I know is what I read on
the web and in the newspapers (easy Harlan); and what I
learned from a Business education and many years of
experience. A bit of common sense also helps.

Bill

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