Free Donuts Result in Tax Bill

It is interesting - and a little sad - how the US tax code nickes and dimes you to death - and how that is only going to continue thanks to that provision in Obamacare that requires that people be given a 1099 if they did $600 worth of business for a comany.

Here's an article from CBS Sports News:

Astros fan learns there's no free breakfast
Posted on: March 15, 2011 5:26 pm
Edited on: March 15, 2011 5:27 pmScore: 146
Rate This Post:Rate This Post:Rate This Post:FairGoodCoolAwesomeI Love It!By C. Trent Rosecrans

It sounds like a riddle -- how much does a free doughnut and coffee cost?

Trick question, right? It's free!

Yeah, unless you're the IRS. According to the IRS, it's worth $927.61, and someone has to pay their part of that.

Houston resident Bob Choate received a 1099 from Washington's finest last month as secondary prize. The original prize was a year's worth of coupons for a coffee and a free doughnut or a dozen doughnut holes from Texas chain Shipely's Do-Nuts. He won the prize as part of the Astros' Fan Appreciation Day at Minute Maid Park.

Because the "fair market value" of the prize was more than $600, he was issued a 1099 stating the valueof the prize or gift. A glazed doughnut at Shipley's is 83 cents, a dozen doughnut holes are $1.25, as is a small cup of coffee. At a maximum bill of $2.50 times 365, the tax bill came out to approximately $927.61.

Choate said he's used about eight coupons and gave 30 to his son.

"I don't feel very appreciated," Choate told the Houston Chronicle. "If I had known this was going to cost this much. I wouldn't have accepted. It was pretty poorly handled. I don't think [the Astros] thought a lot about their customers when they had their Fan Appreciation Day. I know I'm not going to get the full taxable benefits out of this, that's for sure."

Don't know why he's blaming the Astros, I'm sure they had no idea that free donuts were considered to income.

The US tax code needs a serious overhaul. Flat tax, anyone?
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