Man Hit with $237 Tax Bill for Free Donuts

Just when you though the IRS’s convoluted tax system couldn’t get any worse, we get word from the Houston Chronicle that a man has just received a $237 tax bill for 315 free Shipley’s donut and coffee vouchers he won as part of a Houston Astro’s promotion.

IRS rules require organizations to submit a 1099 form for any gift or prize award valued over $600. Because the Shipley Donut prize was valued at over $900, Bob Choate (the recipient of the prize) was responsible for the taxes (regardless if he used all 315 vouchers or not).

Fortunately, the owner of Shipley’s Do-Nuts, Lawrenece Shipley, offered to pick up the tax bill after the Houston Astros refused to make amends for the misunderstanding.

From the Houston Chronicle:
Choate said he’s made the exchange with the Astros and Shipley a lesson for his kids.

“I told them that if you think something isn’t the way it should be, speak up and be professional and reasonable and diplomatic,” he said. “And, if you’re on the other side of the table, you should listen.”

What’s the lesson from all of this? Well, first off, as we see time and time again, very few things in life really are free. When something is given to you, make sure you understand your responsibilities as a tax payer before you accept the gift. Whether you win a brand new car during a hole-in-one contest at a charity golf event or win the door prize at a company outing, the IRS will always find a way to get their cut.

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2 Responses

  1. Carolyn Johnston 7 years ago
  2. Jennifer 7 years ago

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