This tale is told in a recent Forbes article titled “IRS Is Coming After Tom Brady’s Super Bowl MVP Truck“.
The truck is considered a taxable prize, thus Brady has to pay income tax on it. Fair enough.
Yet Brady has also stated that he is going to give the truck to teammate Malcom Butler who made the interception to seal the victory.
The problem?
Because the truck is worth more than the yearly individual gift tax exemption (i.e., $14,000), Brady will have to also pay the gift tax on the truck if he follows through with his announced intentions. Butler, however, will not have to pay tax on the truck as there are no gift tax consequences for the recipients of gifts.
Fortunately, Brady will be able to lessen the gift tax bite if he and his supermodel wife engage in “gift splitting” to permit her individual gift tax exemption to be applied against the value of the gift.
Before making any sizeable gifts, be sure to consult with an experienced estate planning attorney.
