Strange tax question
 

Ok, I'm sitting here watching "Extreme Makeover: Home," and it reminds me of a question.

I heard, when Oprah gave away all those cars, that the problem for the receipents was that they were going to have to pay the taxes on them. Even if Oprah paid the taxes, they would then have to pay income tax on the extra amount.

Is this true? What about people that are given homes? Do they have to pay some sort of "gift tax" on them?

If so, it'd almost make one want to refuse the gift, seeing as mostly people with lower income receive them. They are in a particularly poor position to pay those taxes.

It's treated as ordinary income, and yes the recipients are responsible for paying the taxes on this. For many this can be a real killer, financially, and they have to sell their "winnings" in order to afford to pay the taxes.

Sounds like a gift with a real kick...

Let's put it this way, if you won a gift of $100,000, and have to pay taxes of $40,000, and you refused the gift, you would have thrown $60,000 away. I would gladly accept it, sell it and pay the taxes :)

Taxes makes the goverment run.

We need the goverment to maintain and build the roads we drive our X5 's
on.

No goverment no country, therefore taxes as much as we hate them are good.

Yeah, I know, I didn't mean it in quite that way!

I meant a (hypothetical) situation where one would be burdened beyond their ability to pay.

P.S. Anyone out there that wins the lottery, and doesn't want to pay their taxes, just send me the check, and I'll pay them! :rofl:

Here's where things get interesting...

I'm in the military, and I hate taxes. Talk about cutting off one's nose to spite one's face!

I know we need taxes and government, and I'm not arguing that we don't, I'd just like to see both be (much) smaller...

I hate taxes as well.

We all want to be free and not burden by taxes.

I was involved last year in a local taping of "Extreme Home Makeover." Long story short, I was called onto the set to provide chiropractic care to some of the cast, crew and staff on the site.

I actually had the same question and the story I heard goes something like this: The house and all materials/labor are donated. Sponsoring mortgage companies, banks, etc. also donate money to an escrow account that go towards paying property taxes, utilities, etc. for a certain amount of time. The fund has enough to cover these things plus "extra" for the income taxes the new owners would be liable for. To rephrase what AutoXer had said, If you got $100k and got to keep $60k of it, you still came out ahead.

Don't forget that these houses are turnkey. No taxes, utilities or mortgages to pay. They even get vehicles and tons of craftsmen tools from Sears for free. All they really have to pay for is food.

I can't agree with you more! Don't even get me started on taxes! It's just crazy how much we have to pay!