Re:Why nobody ever wins the car at the mall (2018)
by tayo42 on Monday July 04, 2022 @04:07AM
(#31974656)
Could they have offered to pay the tax? Or would that then trigger more tax, creating some kind of infinite loop of gifts and taxes?
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Re:Why nobody ever wins the car at the mall (2018)
by Denvercoder9 on Monday July 04, 2022 @04:36AM
(#31974860)
Offering to pay the tax does trigger more tax; but as the added tax is less than what you add to the price, the total amount converges (as long as the tax rate is less than 100%). To have the recipient end up with a net payment N after taxes you've to pay N/(1-r), with r being the tax rate.
With a 25% tax rate and car value of $28,500; to make it a tax-free gift Oprah should've paid an additional $9,500.
Re:Why nobody ever wins the car at the mall (2018)
by projektfu on Monday July 04, 2022 @09:07AM
(#31976610)
Yeah, the term is "grossing up" and it's often done for bonuses and things. I've also seen it on sweepstakes. One for Fage yogurt offered a dream vacation to Greece and included a gross-up to pay the income tax.