IRS wants their cut if Tom Brady gives Malcolm Butler a truck

AP

Tom Brady’s doing the right thing by offering his Super Bowl MVP truck to rookie cornerback Malcolm Butler.

But it might be easier and cheaper just to buy him one of his own.

According to Forbes, there are some steep tax implications for Brady’s goodwill gesture —  which we think somehow he’ll be able to cover.

The truck is considered a taxable prize under the Internal Revenue Code, section 74, meaning it is taxed at Brady’s 39.6 federal income tax rate. With the value of a 2015 Chevy Colorado around $34,000, that means a tax bill of $13,500 alone.

Brady’s also going to have to pay a gift tax of $8,000 to hand the keys to Butler, since the tax code only allows one $14,000 from any one person to another.

Again, we think Brady can scratch up the $21,500 to make this happen, but it is getting close to the point where rolling into a New England Chevy dealer and just buying Butler a new one might be easier.

101 responses to “IRS wants their cut if Tom Brady gives Malcolm Butler a truck

  1. Somebody has to pay the income tax, either Brady or Butler. Might as well be Brady. Anyway, I’m sure his accountant can find a way out of the gift tax by gift splitting, or using up $20,000 of his lifetime gift exemption, or other devices, all perfectly legal. Brady could give portions of the interest in the truck to other members of Butler’s family, tax-free, and they could gift their interests back to Malcolm. What about gifting a third to him, a third to his mom, and a third to his dad? One third interests in a vehicle worth $34,000 are all under the $14,000 annual threshold.

  2. Even if the bought butler a new car he would still have to pay the gift tax right?
    Even if he keeps the car for himself he still has to pay prize tax as well right?
    It probably doesn’t change anything but can’t he just sell him the car for 1 dollar or is that fround upon by the tax guys? 🙂

  3. If Brady refuses the gift and the structure has it go from GM to Butler, and not from Tom to Butler, I expect all those issues go away for Brady. The IRS isn’t as irrational as ther are made out to be.

    Don’t kid yourselves, the Forbes family was very astute at avoiding taxes.

  4. I think that I saw where Tom Brady is worth over $200M. Do you seriously think that he is worried sbout paying the extra $21K in taxes to the IRS? This has attracted a lot of attention and the IRS will be getting their slice. You can bet that Tom has top tax accountants who will take care of it.

  5. Yes, IRS, we all know you suck and you love to butt in whenever you’re not wanted. I’m glad Brady is doing this – it was my first thought when they showed the truck after the SB.

    But the fact that giving someone a truck almost costs as much as the truck itself in taxes is just absurd.

  6. Surprised Chevy hasn’t stepped up and offered to give Butler a truck. Think of the publicity they’d get for $34k.

  7. Brady has to pay the tax of winning the truck whether he gives it away or not. So giving it to Butler is only costing him an extra $8K. Buying Butler a truck would be the full $34K.

  8. First of all….Does Malcolm even want the truck?

    Secondly, it is a sad state of affairs when someone in the 40% tax rate has to cough up another $14,000 to give someone a truck that belongs to him.

    Third…It might be a really good PR move for the New England area GM dealers to give Malcolm a nice, full-sized, Silverado, instead of that wimpy little Colorado. Advertise it with some classic AC/DC music all you want….you’re still not getting a sheet of plywood home in it.

    Brady will give him the truck, if Butler wants it. He’s a cool dude. Man, it should be easier than this though!

    Time to simplify the Government and the NFL rulebook.

  9. Wait…what? Gift tax?

    Awesome – so basically, the government wants a piece of the action for literally giving something away.

    On what level can that be defended?

  10. The motto of our federal gov’t should be: “No good deed goes unpunished”

    Is the state of Taxachusetts going to take a cut, too?

  11. This law was meant to close loopholes that the wealthy have exploited to avoid taxes but of course, it is used to punish someone who is trying to do a good thing. Every good deed is punished by somebody

  12. Ok….seriously? Just sell it to Butler for $1 and you can say it wasn’t a gift. I realize that would still leave Brady with a $13,500 tax but I’m sure he’d be willing to dish that out in return for what Butler did.

  13. So the IRS takes in a total of $21,500 for this giveaway. Talk about highway robbery!!!

  14. To all the haters who thought he should just hand over the keys without consulting advisors. Not to mention the tax implications for Butler and any contractual obligations that go with being MVP

  15. Might be easier, but it won’t be cheaper. He has to pay the $13,500 either way, so he either pays $8,000 to give him the one he won, or $42,000 to buy him a new one ($34k + $8k gift tax).

    Rich people normally have good business sense…

  16. Man, Brady can’t catch a break. Get a $34,000 gift and HAVE to pay $13,500 gift taxes on it. He should drive it into the Boston Harbor to protest taxes.

  17. It’s not a tax. It’s a service that the government provides to take your money away.

    That’s why it’s called the internal revenue service

    I believe Butler will also be taxed on the amount of the gift once Brady gives it to him

    Brady can afford it, no question. But it’s ridiculous that the IRS may be taking twice the value of a truck in the form of taxes.

    Oh, i’m sorry, internal revenue.

  18. Um, if he bought Butler a new truck, he’d still pay income tax on the Superbowl truck, still pay tax on his Superbowl share, and still have to pay a gift tax on the truck he’s giving away, plus he’d be paying for an entire truck. Net loss of $26,000 + add ons.

  19. There’s our government for you. $21,500. for doing absolutely nothing. Brady should just sell him the truck for $1. and pay the taxes, and there would be no gift tax.

  20. So you pay tax on a gift (I hear you have to pay some even if you choose not to accept and give to charity)

    and then pay it again when you give it away? In who’s mind is that reasonable?

  21. This is all assuming he’s actually signed for and taken possession of this truck by now – which I highly doubt.

    Seems like the obvious thing to do is just have him convince Chevy to formally give the truck to Butler.

    Also, maybe a stretch, but would Tom Brady giving an undrafted FA teammate a $35K gift violate some CBA rule? Especially when he has already made it clear he is doing it as a result of his on-field performance and it’s clearly because he doesn’t need it and a dude making like 200K this year does….

  22. The $13,500 income tax is due whether he gives it to Butler or keeps it so the only cost of giving it away is the potential gift tax. Sounds like H & R Block was involved in the $21,000.00 calculation.

  23. Brady’s gotta pay the income tax on it either way, whether he gives it away or not, the poor bastid. I think he can handle the $8k gift tax, though. Pass the hat. That’s well worth the ring Butler landed everyone with that interception.

  24. So, if Brady chooses to donate the rig to meals on wheels it costs him $21,500? Let’s see, how about you just sell the piece of government motors junk and give butler the cash for a Toyota?

  25. The dude helped seal Brady’s legacy as the best ever. I’m sure he would gladly pay 20k, 50k, 100k to hoist up that Lombardi for a 4th time. Money is not an object to Brady. I’m sure everything will get worked out so Butler won’t have to pay a dime.

  26. FYI, if Brady goes to a Chevy dealer and buys Butler a new truck, he would still have to pay the gift tax on the transfer.

    My guess is that they will work something out so that Chevy grants the truck directly to Butler. (Since the truck is not in Brady’s name yet, I believe that wouldn’t be considered a “gift” from Brady to Butler.)

  27. If he sells it to him for a penny, the new owner will still have to pay tax on the actual value as determined by his local DMV, not the selling price.

  28. You can’t just sell the truck for $1. The IRS will just reclass the transaction. And as some other poster said: He can gift split with his wife and use some of his lifetime exclusion. He won’t pay any taxes on the gift.

  29. If TB buys MB a truck it’s still a gift.

    Now if TB and GB jointly title the truck and give it to MB a truck they can use both of their exemptions.

  30. Read the friendly tax code. Since Tom and Giselle are both taxpayers the property can be gifted from the couple with each getting the 14k exemption.

  31. All the people who are suggesting Brady sell the truck for cheap, here is the problem. Brady will be charged with tax evasion and will end up in jail.

    Please don’t be stupid. Pay the uncle sam. If you don’t like taxes don’t elect these imbeciles who try to tax you for everything and waste money on useless programs.

  32. originalbosfan1 says:
    Feb 5, 2015 10:47 AM

    FYI, if Brady goes to a Chevy dealer and buys Butler a new truck, he would still have to pay the gift tax on the transfer.

    My guess is that they will work something out so that Chevy grants the truck directly to Butler. (Since the truck is not in Brady’s name yet, I believe that wouldn’t be considered a “gift” from Brady to Butler.)
    _______________________

    With the pub they’ve gotten out of this, Chevy would be smart to gift him his own truck….or better yet, get a local Chevy dealer to make him a spokesman and he can drive one for nothing for a decade like Favre did in the Green Bay as a spokesman for Bergstrom Chevy…..

  33. And we wonder why we don’t have more people giving people big gifts such as cars and other high priced items. The government has to have their hands in everything. I think, if it’s yours to give away, then you should be allowed to give it away, without paying any high priced gift tax.

  34. Problem with doing THAT is that it creates income tax liability to Butler, who’s making a whole lot less than Brady is. It wouldn’t be a “gift” from the dealership (gift “intent” wouldn’t exist), so it’d be taxable income to Malcolm.

  35. Brady should just refuse the gifted truck or just sell it and pocket 10K, and then go buy Butler a car he really wants. seriously no NFL player wants to ride around in chevy colorado.

  36. Nice to know even Super Bowl MVP’s get hosed by the IRS too ! For Brady, take the truck, pay the gift tax and sell it to Butler for a buck, and that’s that !

  37. Maybe Brady and Butler can race for pink slips a la The Fast and the Furious. Brady loses and he just has to give it up. Lost a bet. It worked in those movies, so you know it will work in real life.

  38. That solves nothing. Brady has constructively received the truck, so refusing it won’t change the fact that he’ll be taxed on it (income tax). And buying a truck for Butler is still a gift to Butler, subject to gift tax rules.

    The solution could not be simpler. Give Malcolm the truck. Tom and Giselle gift $28,000 worth of the truck to Malcolm (tax-free to all of them), pay the gift tax on the remaining $6,000 of value, pay income tax on the $34,000 truck next April (which T&G have to pay no matter what), and just get on with their lives.

  39. Chances are the actual value is closer to $28,000, not the inflated $34,000 sticker price. So by gift splitting with Giselle, they can avoid any gift tax.

    If Brady takes the truck, he will have to pay income taxes on it, on whatever value Chevy 1099’s him for, which will probably be full sticker. You can fight that but it is a pain.

    Brady can refuse the truck at any time up to signing the title. Just because it has been “awarded” doesn’t mean it is his yet. People on game shows turn down prizes all the time because they would have to pay taxes, and many prize values (trips especially) are wildly overpriced, which can put them in a situation where they owe more in taxes then the prize is actually worth.

  40. That’s true, to a point. I assumed he was “refusing” it in the sense of giving it to Butler, not by NOT accepting it from the dealer or manufacturer.

    Because if he refuses it by NOT accepting it, then he has no standing to “gift” it to Butler. If he never owns it (constructive receipt), he can’t give it away.

    He can only give it to Butler if he, Brady, owns it, and in order to own it, he cannot “refuse” it in the sense you mean. He has to sign the title, and then he owns it and pays income tax on it (and state sales tax, depending on his state of domicile), regardless of what he does with it (well, if he gives it to 1877kars4kids, then he’ll get a tax deduction to offset the income).

  41. Can’t sell it to him for a dollar. In Mass selling a vehicle is subject to state sales tax, which is transaction price or book value, whichever is higher. Butler would have to pay 6.25% sales tax on 34k. Brady would still have to pay the IRS 13.5, even if he never actually takes the money.

  42. The IRS is a criminal organization.

    Brady will have to pay the tax no matter what.
    Then sell the truck to break even on the tax liability for the taxed amount. Butler still saves $20K on a brand new truck.

    Sad but true that this is considered a good deal, that we the people can be bullied this way.
    And… if the truck is a true gift, then Chevy should foot the tax bill on Brady’s behalf so that the gift does not cost him $14K, that’s not a gift, it’s a liability.

  43. Is there a kickstarter for this yet. Hell I’ll start one and I am a Seahawks fan!
    I think Malcolm should have that truck.
    Or… wait, it seems like the government has found a way to keep escalating the taxes owed by the gifter, the giftee, the gifted and the helpful public. If we raise the money to cover the gift tax or the income tax or both, then Malcolm owes an even bigger tax than all the others put together and income tax for the funds raised. Coming , going, laying, staying, praying.
    Maybe that is why The New England Patriots won a miracle last-minute victory to remind us to wake up!
    How much does Gronk owe for all the beer he was gifted with?

  44. Chevy couldn’t even cough up a silverado?

    Frankly, I’d rather have a Colorado…but if you’re going to put a vehicle in the national spotlight…shouldn’t you at least go semi-high quality?

  45. Boo fricken’ Hoo….

    Brady made 97,000 for playing the game. More than the overwhelming majority of Americans make in a year. He is worth tens of millions. Largely because of a league which gets huge subsidies from local communities to build stadiums, and keep its “nonprofit” status.

    He probably has the money to pay the gift tax between the cushions of his couch.

  46. Your gift tax information is wrong. Brady and his wife can gift split and gift $28,000 to Butler without having to file a gift tax return. Also, any gift amount in excess of $28,000 only reduces the lifetime gift tax exclusions of $5,430,000 each that both Brady and his wife have. They would not have to pay any gift tax unless they already used up those exemptions.

  47. Brady should refuse the truck. If he can gift $14k per year, structure 2.5 years of payments – $14k for two years and $7k for the third year to cover the acquisition costs of a truck. Let his teammate buy a real truck and not that faux mid-sized bloated thing from Chevrolet.

    There is nothing to be gained by Brady to accept this worthless truck even for himself.

  48. Brady will pay the taxes and give the truck away. Writer of the article is merely pointing out that Brady will have to pay to give it away. That won’t stop Brady.

  49. Lots of uninformed people here. If he accepts the truck, Tom pays not only Federal Income Tax but State Income Tax. If he’s a Massachusetts resident, that’s 5.2%, raising his total tax liability to over 40%. Call it $14,000 of income tax for a truck he’s not going to use.

    If he sells the truck to Butler for $1.00, the difference between the truck’s fair market value and the selling price is a taxable gift. No savings here. If Giselle is a US citizen, she can “split gift” with Tom, and they can shelter $28,000 of the gift from Federal gift tax (there is no state gift tax in most jurisdictions).

    Tom would be better off gifting the truck to his favorite charity instead (he’s a big supporter of Best Buddies). He’d get an income tax deduction that would save him the $14,000 of income tax he’d otherwise pay, on a truck he’ll never use.

    He could then walk down to the local Cadillac or BMW dealership and use the $14,000 to lease Butler the Escalade, X5 or 750 of his choice. No gift tax, and Butler gets a really nice ride for 3 years.

    Yes, the Tax Code is ridiculous. But smart people with good advisors know how to minimize taxes.

  50. The first problem is the $14K ceiling in the gift tax code.

    When was that figure arrived at, 1874? Ridiculous. That number should be about $200K or more.

    But, secondly, the whole, “we are going to tax every exchange of goods” is nonsense. Sales? Fine. Income? (Sure, but fix the mess). Massive wealth distribution to family, I guess.

    The whole gift tax creates a massive inefficient use of resources as the wealthy try to find creative ways to pass on wealth to their children. So, they hire a bevy of lawyers and accountants, form corporations, get their children in the business as owners, and it becomes a complicated mess of time, money and resources devoted to just avoiding the gift tax. Great government there.

    If the government wants their tax dollars, fine, but simplify the tax system and free those resources to go to something that is actually resulting in economic productivity. Of course, simplifying the tax code means millions of attorneys and accountants will have to find new work. So, they don’t want that to happen!

    I’d love it if the SB MVP – when offered the truck – would verbally decline and say, “I’d love to take that truck, but thanks to Congress and the President, the taxes I will have to pay just to receive it are so outrageously high that I can’t afford to accept it, sorry, I decline.” Perfect platform with 50% of America watching.

  51. It’s still not that simple, quackbury. At Brady’s income level and assumed itemized deduction level, his itemized deductions will be limited. The charitable deduction for the truck won’t give him a $14,000 federal tax savings. He’ll be taxed in full on the FMV of the truck, but effectively will only get a partial deduction for the FMV of the truck donation.

    Sure, he can still lease $14,000 of value for Butler without triggering the gift tax, but he’ll still come out behind, because of the itemized deduction limitation.

    Still, this is all pocket-change to Brady.

  52. That doesn’t work either, laserw. Brady’s out $35k doing it your way.

    If he takes the truck and gives it to Butler, Brady pays, say $14k in federal and state income tax, at worst another $3k in gift tax – total cost to Brady, $17k.

  53. Is there even a law that holds him liable for federal income tax?

    Could someone find the law and quote it for me?

    I’m looking for the specific words, not general platitudes like “everyone knows.”

    Can you please show me where I can find it, too!

    Thanks in advance!!!

  54. Meanwhile, GE, a gajillion dollar industry, pays ZERO taxes. Got that? Zip, nada, nothing.

    And, guess how much business they get from the defense department.

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