The White House says President Obama will donate the $1.4 million in cash that comes with his Nobel Peace prize. Which made us wonder: What are the tax implications of this?
Over at Politico, Josh Gerstein reports on some of the possible legal complications of accepting the monetary award, even if the President immediately gives it away. His source suggests that Obama could, among other things, end up owing some tax.
Maybe only if he has a terrible accountant. As the Politico item notes at the end, there's an exception. Kail Padgett at the Tax Foundation's blog points us to the relevant section of the IRS tax instructions. One surprise: It actually mentions the Nobel. Here it is:
Long story short: It looks like Obama will be okay with the IRS as long as the money goes directly to charity. But he'd better get a receipt from the Norwegians.
Update: At TaxProf Blog, tax law professor Ellen Aprill points out that Obama might be okay even without the rule above. You can deduct charitable contributions up to 50% of AGI, and Obama's income from sales of his book may be high enough to put him in the clear. Aprill speculates that even if it isn't, Obama might decide to declare the income anyway, for political purposes. Not sure I see the point of that... is there really that much hay to be made over Obama not paying taxes on money he didn't ask for and didn't take?