I previously blogged the tax consequences of another giveaway on the October 30 Oprah Winfrey Show:

Every member of Oprah’s audience is going home with a $1,000 Bank of America debit card and a Sony DVD Handycam…but there’s a catch. Oprah is challenging more than 300 audience members to donate their money to a charitable cause… The audience members can’t spend their money on family members, and they’ll be videotaping their stories for a future show. They only have one week to come up with a plan for their money!

I noted that "[t]he tax consequences seem straighforward — income to each recipient ($1,000, plus fmv of the Handycam), along with a $1,000 charitable deduction to the extent the $1,000 is given to a qualifying charitable organization."  This month’s "Shop Talk" column in the Journal of Taxation by Sheldon I. Banoff (Katten, Muchin Zavis Rosenman, Chicago) & Richard L. Lipton (Baker & McKenzie, Chicago) takes a much more detailed look at the tax consequences of the arrangement, including:

• Is the receipt of the $1,000 debit card income to the recipients?
• Does the constructive receipt doctrine apply to the receipt of the debit card?
• Do the conditions on the use of the debit card mean that there is no income opon receipt?
• Should the debit card be treated as a nontaxable prize?
• If the receipt of the debit card is not treated as income, is there income upon the usage of the card?
• If so, does the usage of the card for the benefit of a charity generate a charitable deduction (which may not make an audience member whole)?
• Would the use of a the card for the benefit of a needy individual foreclose a charitable deduction?  Would it be treated as a taxable gift?
• Must the recipients report as income the fmv of the DVD recorders?
• Can Bank of America deduct the payments under section 162?
• Does Bank of America have reporting obligations with respect to the payments to the audience members?