My friend Wesley sends the following story:
Bob Choate has sold restaurant equipment for years, so he already knew there was no such thing as a free lunch.
Now, much to his chagrin, Choate has found there’s no such thing as a free doughnut, either.
Choate, 56, of Houston last fall won a year’s supply of coupons from Shipley’s Do-Nuts as one of the lucky prize-winners during Astros Fan Appreciation Day at Minute Maid Park.
“I went up to the customer service window, fat, dumb and happy, and signed a form and picked up a fistful of certificates, each good for a free doughnut or a dozen doughnut holes and one free cup of coffee,” he said.
But last month, much like the Grim Reaper, the punch line to his prize landed in Choate’s mailbox: an Internal Revenue Service Form 1099, informing him that he owed taxes on $927.61 in “free” coffee and doughnuts.
Raise your hand if you saw that coming. In fact, I knew what it was about when I saw the title, even though it didn’t mention taxes or the IRS. Many are aware of Oprah Winfrey giving away cars and the lucky studio audience getting stuck with the tax bill on them. There’s actually a raffle going on in Arapaho that involves a free $40k pickup. When I saw it, I didn’t think “free truck!” so much as “truck for 30% of its value!” Given that I am not in the market for a pickup, much less a $40k one, it would be wasted on me. But at least you can sell a vehicle! This guy is paying taxes on donuts that he may never actually get to eat:
Two months into the new year, Choate said he thus far has used eight coupons. He gave about 30 to his son, who gave them as a birthday present to one of his teachers.
That means he still has more than 300 coupons to go – or 72,600 calories, presuming 242 calories per doughnut, and 1,800 ounces of coffee if he’s to get full value for his prize from the Astros.
He can donate the coupons to charity or he can simply hold on to them and use them over the next eight years or so.
I wonder what the ones that won Superbowl tickets for the rest of their life have to pay annually. Even though it’s free, it’s probably kind of expensive.
I’m not sure that there is a really good answer to this. Payments in donuts are income, after all. Perhaps it’s up to the baseball club to pony up the taxes on it, too. Maybe when it comes to non-cash payments, that sort of thing should be required? I’m sure that’s a bad idea for one reason or another.