In recent days the IRS and the Olympics have become strange bedfellow . Several articles have appeared discussing the two tax consequences of Olympic Medal winners. The first tax aspect is the tax treatment of the cash awards given to Bronze Olympic Medal winners, Silver Olympic Medal winners and Gold Olympic Medal winners. This is fairly straight forward: those cash awards are taxed at ordinary income rates. Since it is presumed many of the Olympic Medal winners will have productendorsement deals it can be further presumed the cash awards will be taxed at the highest tax rates.
The second tax aspect though is the value of the Olympic Medal itself. Many of the recent news articles focus attention on the precious metal value of the Gold Olympic Medals, Silver Olympic Medals and Bronze Olympic Medals with values ranging in the several hundred dollar range depending upon which Olympic Medal. If that were the taxable amount then the tax due would be negligible. What is not mentioned in the numerous articles is the value of the medal itself on the open market in places like EBay, Craigslist and other online auction and sales venues. If an Olympic Medal were to be sold, then its value on the open market could be substantially more than its pure precious metal value. In fact it is reported that several Olympic Athletes over the years have sold their Olympic Medal and then donated the proceeds to charity.
The interesting part is the precedent set by the Internal Revenue Service regarding the Oscar Statuettes given by the Academy of Motion Picture Arts and Sciences at their annual Academy Awards ceremony. It is reported the IRS wanted to tax the intrinsic value of the Oscar Statuettes rather than just the material value (analogous to the pure precious metal value of the Olympic Gold, Silver and Bronze Medals). Once again, it is presumed the intrinsic value is substantially more than the pure material value. In fact, according to the reports, the Academy of Motion Picture Arts and Sciences avoided this tax treatment by agreeing to require Oscar Statuette recipients sign a “no sale” provision which presumably would drastically drop the value of the Oscar Statuette for tax purposes.
We are not aware of any such “no sale” provision regarding Olympic Medals which leads one to wonder whether some day Olympic Medal recipients will be dealing with the IRS over the value of their Olympic Medal. If we were facetious we would speculate those negotiations with the IRS could become an Olympic Sport.
For more information on tax law concerns, contact Horowitz & Weinstein.