totebags wrote:Robert K S wrote:Some disclaimers. Tax is not my field of practice. I took the class on wealth transfer tax in law school as one of five semester-long tax courses I took. I provide this information not so that anyone relies upon it as tax advice (IANYL) but rather as a contribution to the general discussion.
Section 61(a) of the U.S. federal tax code includes in gross income "all income from whatever source derived" (including, although not expressly listed, game show winnings). Section 102 states that gratuitous receipts (gifts, bequests, and inheritances) are generally excludable from gross income. Section 262(a) is interpreted as implying with the non-deductibility of gifts (as a subset of personal and familial expenses). Together, these provisions set up one layer of taxation: gifts are taxed as income to the donor but not to the recipient.
Tax is my field of practice. I am not planning on getting into this conversation without understanding more about the contract between the contestant and the show. But I need to course-correct here. Game show winnings are not gifts, but prizes or awards. Section 74(a): "[...] gross income includes amounts received as prizes and awards."
This discussion is on the assumption that there were no contract (specific to the donation of the winnings) between the show and Cindy. My understanding of Opus' argument (and, full disclosure, one I agree with) is that, should the estate decline the winnings, they would become a gift from Jeopardy! to a charity, should TPTB elect to donate them directly.
This is what we are trying to ascertain the legality of. Kenny's opinion was that that cannot happen. But, thus far, nobody has cited a specific code section that covers it.