Re: Oprah's $5K gifts to 100 employees. I think she's got it all wrong. In a discussion of a similar case (corporation president wanted to gift $10K to each of 10 executives from personal funds) on misc.taxes.moderated last November, Brian Bivona, CPA posted the following:"I suppose that you did not read my response that was posted shortly after your original post. Your friend and his employer both have a problem!" "Section 102 generally excludes gifts from income. On the other hand, section 102(c)(1) provides that the exclusion from income for gifts does NOT include amounts that are transferred by or *for* an employer to or *for the benefit of* an employee." "Thus is doesn't have to be a transfer directly from an employer to the employee to fall outside the general exclusion. A transfer by the president to the 10 other employees as a gift would probably be treated as paid "for" an employer, even though it was not transferred "by" the employer. Thus, the scheme WOULD NOT WORK." "Further, if this were unwound on audit, the profit-sharing plan would probably have an excess contribution for the president and would have underfunded the other 10. It could result in excise taxes or possible disqualification of the plan. The employer will also likely end up with a nasty penalty dispute over the payroll taxes that were not withheld." You would think that someone with that much money (Oprah), could afford some decent tax advice before she acted foolishly.Ira
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