Houston Chronicle, ‘Lucky Winner’ at Astros Game Learns Nothing Is Free:

Bob Choate has sold restaurant equipment for years, so he already knew there was no such thing as a free lunch.

Now, much to his chagrin, Choate has found there’s no such thing as a free doughnut, either.

Choate, 56, of Houston last fall won a year’s supply of coupons from Shipley’s Do-Nuts as one of the lucky prize-winners during Astros Fan Appreciation Day at Minute Maid Park.

“I went up to the customer service window, fat, dumb and happy, and signed a form and picked up a fistful of certificates, each good for a free doughnut or a dozen doughnut holes and one free cup of coffee,” he said.

But last month, much like the Grim Reaper, the punch line to his prize landed in Choate’s mailbox: an Internal Revenue Service Form 1099, informing him that he owed taxes on $927.61 in “free” coffee and doughnuts.

“Right,” Choate said. “Fan Appreciation Day. We appreciate you, oh, and by the way …”

Choate, mind you, is no rube. He knew about Form 1099s, and he presumed there would be some tax liability for his edible appreciation. Nearly a thousand bucks, however, exceeded his expectations considerably.

However, Roger Aksamit, an attorney with Thompson & Knight who is board certified in tax law, said Choate’s plight demonstrates one of the iron-clad rules of the tax code.

“If you get paid in doughnuts,” Aksamit said, “you’ve got to pay in dough.”

(Hat Tip: Dan McCall.)