Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: bentway who wrote (519510)	10/9/2009 2:23:23 PM
From: longnshort	Read Replies (2) \| Respond to of 1574683

it will cost the US taxpayers more than that for him to fly over there to get it. Maybe he should have it mailed to Mayor Daley for blowing the Olympics

To: bentway who wrote (519510)	10/9/2009 2:38:52 PM
From: Road Walker	Respond to of 1574683

Tax free, as we do not tax Nobel prizes. Cool...

To: bentway who wrote (519510)	10/10/2009 9:16:31 AM
From: Jim McMannis	Read Replies (3) \| Respond to of 1574683

RE:"Let's not forget, it comes with 1.2 million dollars! Tax free, as we do not tax Nobel prizes." Not entirely true... taxfoundation.org Is the Nobel Prize Award Subject to Income Taxation? In the wake of Paul Krugman's awarding of the Nobel in economics, a rumor has circulated the internet saying that the cash award of around $1.4 million is not subject to income taxation by the IRS. Here is one such claim (on a website that says Krugman should have a special tax imposed on him). Let's see what the IRS says about this: Pulitzer, Nobel, and similar prizes. If you were awarded a prize in recognition of accomplishments in religious, charitable, scientific, artistic, educational, literary, or civic fields, you generally must include the value of the prize in your income. However, you do not include this prize in your income if you meet all of the following requirements. 1.You were selected without any action on your part to enter the contest or proceeding. 2.You are not required to perform substantial future services as a condition for receiving the prize or award. 3.The prize or award is transferred by the payer directly to a governmental unit or tax-exempt charitable organization as designated by you. The following conditions apply to the transfer. a.You cannot use the prize or award before it is transferred. b.You should provide the designation before the prize or award is presented to prevent a disqualifying use. The designation should contain: i.The purpose of the designation by making a reference to section 74(b)(3) of the Internal Revenue Code, ii.A description of the prize or award, iii.The name and address of the organization to receive the prize or award, iv.Your name, address, and taxpayer identification number, and v.Your signature and the date signed. c.In the case of an unexpected presentation, you must return the prize or award before using it (or spending, depositing, investing it, etc., in the case of money) and then prepare the statement as described in (b). d.After the transfer, you should receive from the payer a written response stating when and to whom the designated amounts were transferred. These rules do not apply to scholarship or fellowship awards. See Scholarships and fellowships, later. Basically, unless Krugman donates the money to an eligible charity, he must pay tax on it. And that's correct given that such an award is indeed Haig-Simons income. In terms of the economics, one could possibly justify a special one-time tax on Krugman given that it would be lump-sum. This is similar to a windfall tax on past capital or labor income. And depending upon the elasticity of the cash award to work effort (which is probably pretty small) going forward, optimal tax theory could argue that such awards should be subjected to a higher tax rate than other labor income. From a sound tax policy perspective, however, this would be pretty unfair as it is rather arbitrary.