Expert: Gifting Malcolm Butler MVP Truck Won’t Be Cheap
They say nothing in life is free, and in the case of Tom Brady’s plan to give Malcolm Butler his shiny, new truck, they’re right. But if he files well, the Super Bowl MVP could significantly reduce his tax payment, according to tax attorney Christopher Wright of New York accounting firm Marks Paneth.
With the truck in his possession, Brady will owe a gift tax on the value of the truck if and when he transfers ownership to Butler. This tax clocks in at a max of 40 percent, and with the Super Bowl truck likely tricked-out well past its $20,120 MSRP, Brady could owe tens of thousands of dollars — but there’s a way out.
According to Wright, American taxpayers can give as much as $14,000 worth of gifts tax-free to another person in a given year, meaning Brady can reduce the total taxable price of the truck by that amount, provided he hasn’t already gifted Butler anything this year. And provided his wife hasn’t either, he could use her exemption to reduce his total tax cost by $28,000.
And even if the total value of the gift exceeds $28,000, Brady might not owe a cent. Taxpayers are alotted a lifetime total gift exemption of about $5 million, Wright said, and if Brady hasn’t exceeded that, anything above the $28,000 can be taken from that.
That’s not to say the process will be cheap for Brady, who will have to pay income tax on the truck to even take it into his possesion. According to a recent post on the Forbes contributor network, Brady could owe federal taxes at a rate of 39.6 percent. The author cites truecar.com as listing the fair market value of a 2015 Chevy Colorado at around $34,000, meaning Brady would owe $13,500 in income taxes. Wright declined to put a dollar amount on Brady’s likely income tax obligation, though, saying there are too many variables involved in Brady’s total annual income to place a rate on it.
Regardless of how things shake out, if Brady accepts the truck, he’ll have to pay income tax. He also has the option of declining the truck, Wright said, but would then be unable to give it to Butler.
h/t – Forbes.com via ProFootballTalk
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