These bags usually fill up with about $50K worth of premium swag. Past gifts have included: trips to islands, designer leather bags, jewelry from Tiffany & Co., designer sunglasses, premium hair products, watches, cameras, and loads of other cool stuff. Since these ‘gifts’ are received in exchange for services rendered by the celebrities that receive them, the IRS considers them to be income under Revenue Code section 61. That means the IRS expects the celebrities to pay tax on the value of each gift bag they receive.
Among the celebrities included in the 2014 Grammy’s lineup are: Beyoncé, Jay-Z, Katy Perry, Imagine Dragons, Pink, Macklemore, Merle Haggard, Lorde, Ringo Starr, Paul McCartney, Robin Thicke, Taylor Swift, and a host of other top-name stars. None of these celebrities will get paid to present awards or to perform at the Grammys; they do it for publicity, to help out the music community, or to help recognize the achievements of their peers. The gift bags are a nice way to say thank-you for helping out, and much of the swag is actually donated by companies looking for high-profile exposure. Millions of dollars of high-end swag will be given away to celebrities at the 2014 Grammys. Since celebrities tend to be in the highest tax brackets, the IRS will be expecting to take in almost 40% of everything that’s given away. That means that without getting a single nomination, I predict Uncle Sam will be the biggest winner at the 2014 Grammy Awards.