Bridget Crawford (Pace), Charlie Sheen’s Oprah Problem:
Of all of the odd news concerning Charlie Sheen in recent weeks, one particular tidbit caught my tax-professor eye. The actor is holding a raffle for two tickets to his roadshow in Detroit on March 22, 2011. “Winner and guest will hang out with Charlie at the VIP after-party,” the “WINNING for Charities Raffle” site proclaims here. The site also claims:
- Winner will receive a cash prize in the amount of $907.50 to mitigate the Winner’s tax liability that results from winning the raffle. This prize is withheld and paid, on behalf of the Winner, directly to the IRS ($750) and the Commonwealth of Massachusetts ($157.50).
Gregg Polsky (North Carolina) notes in the comments: “The gross up payment amount does reflect that the payment itself is taxable. They value the total prize (including the tax payment) at $3,000; $750 reflects the 25% withholding rate on prizes. The “mitigate” language was used to reflect that, if the winner is subject to a marginal tax rate higher than 25%, the winner would owe additional tax on the prize.”
