AFAIK, this sort of thing is not taxable in Canada - unless it’s related to your employment or Revenue Canada sees it as an attempt to avoid income tax on actual earning. So if you win a car at a game show (oh, wait, this is Canada - you win 100 boxes of Kraft Dinner) no tax. If you win a workplace incentive, free car to the most productive salesman, that’s part of your employment income.
Similarly, no gift tax; presumably Uncle Fred paid his income tax on the $2,000 before he handed it to his nephew, so why should he pay taxes twice?
They will however come after people who try to play games with this to avoid legitimate taxes - i.e. pay my low-tax-rate kids $5,000 a month to clean the office, instead of taking the money myself as owner withdrawal (taxable at a much higher rate) and then giving it to the kids tax-free. You can pay the wife to clean the office (I know someone who does), but… the compensation has to be reasonable compared to the job done, and it has to be a real job. You can be generous, but not unreasonably so.
Is this in the US? It seems ripe for exploiting. “My company didn’t pay me $50k for my work, they just rented my house for 14 days”
Because she’s supposedly giving cars to people who need cars, who then won’t be able to actually afford the cars because of the tax and have to sell the car. She’s promoting herself as being highly altruistic, but isn’t actually doing anything to help these people in need.
Why are you making the argument that she’s not required to pay when the question is someone wondering why she didn’t choose to? That’s like someone saying that you shouldn’t be an asshole and then someone bringing up freedom of speech as an indication that she should.
The answer to his question is simply “Oprah is not as generous a person as she tries to lead people to think she is.” Not right wing arguments. It’s why I’ve always preferred Ellen, and hope there’s no similar problem with her gifts.
Yes, in the US.
IRC § 280A(g):
OR, if you don’t like reading tax code, see Publication 527, Residential Rental Property:
Only if resale value less fees and taxes is zero.
Cool, thanks for the links. Still seems weird to me - I can rent my house for 13 days for $20 million, but I don’t have to declare the income? I must be missing something.
Well, yes, but you cant use that as a way of getting around employment taxes.
Like equivalent tax rules in Canada, I assume some payment has to be reasonable, or else it’s deemed simply an attempt to evade taxes.
Sort of like… You can hire your family at standard janitorial wages to clean your office. But if you pay your wife and kids 3 times regular janitorial wages, and the job only called for 1 full time janitor - then you are trying to evade taxes on yourself.
(Mark Twain: “How many legs does a dog have if you call the tail a leg?”
Second Banana: “Five?”
Mark Twain: “No, four. Calling a tail a leg doesn’t make it a leg.”)
I suspect it works for home reno shows because it is legit in that case. They are renting a house and using it as a prop for a renovation show - meaning it has an extremely high value to the show, so the value added is not out of line. The recipients are not otherwise connected to the business, so it’s not an attempt to disguise wages or bonus as rent.
I didn’t see any *specific *exceptions in the link but I’d imagine it would get you in trouble. A related, but not identical situation:
You can write off expenses for rental property you own but only if you rent it out. You can’t have any expenses for a property that sits empty all year or is inhabited solely by the owner. You can rent it out to a family member, but you have to charge a fair rental price - you can’t claim that you were charging them $100/month and expense that (though note that in most cases, you can’t exceed your rental income in deductions anyway).
Similarly, doing your think would probably get you into trouble as you are not charging a fair value.
Here’s the IRS part, though note that they don’t say anything about greater price: