Here's What George Clooney Owed in Taxes After He Gave His Friends $14 Million in Cash
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George Clooney sure is a good friend.
Businessman Rande Garber told MSNBC this week that in 2013, Clooney rounded up 14 of his friends and gave them each bag with $1 million in it—a token of thanks for supporting him early in his career.
Perhaps more impressive: Clooney also agreed to take the tax hit.
Here's why that's a big deal.
In the first place, the friends don't have to pay taxes — Clooney does, according to William McDevitt, a CPA at Wilkin & Guttenplan, P.C. The person who gives a gift owes any gift tax, and there is no income or gift tax due from the recipients, McDevitt told Money.
So how much did Clooney pay?
The gifts were made in 2013. That year, the top gift tax rate was 40 percent.
But first, Clooney gets to make two deductions. The first is fixed at $14,000. That's the level at which an individual can give someone money in one year and incur no gift tax. Since Clooney gave 14 gifts, he can deduct $196,000 from the total tax bill.
He can also take a lifetime tax exemption of 5,250,000. This is the amount of money an individual can give during their lifetime and pay no gift tax.
So assuming that Clooney had not previously used any of his lifetime exemption, he now only has to pay the 40 percent on $8,554,000.
Thus, assuming all of the above, Clooney owed $3,421,600 in gift taxes on top of the $14 million he gave away.
A friend indeed.