How Much Does it Cost Oprah Audiences to Receive Free Gifts?

Oprah, the queen of gift giving has once again proved how material the world is. The joy of getting things supposedly for free makes her audiences euphoric. The mainstream media is over this news head over heels.

The first reaction I had watching clips of her show titled Oprah’s Favourite Things 2010, is oh! well, I am not Oprah and I do not make money like Oprah, so these could certainly be her favourite things, not mine.

Then again, it’s a commercial TV show. All her favourite things were paid for by the manufacturer of the products for free to Oprah show, to promote their products for the 2010 Holiday Season.

So, if Oprah really likes to drink Coke and Pepsi provides free drinks to her audiences, what is Oprah going to say her favourite drink to the audience? Pepsi or Coke?

Oprah show is just another platform of advertising for the products listed on her 2010 favourite things. Once you understand this simple concept, you will see her gift giving in a whole different way.

Hundreds of product manufacturer line up to show their products on Oprah show. It’s the holy grail of product showcase, because of the sales bump the products receive after showcasing on Oprah show. They enthusiastically agree to provide free products to Oprah audiences. Its their advertising cost.

It does not cost Oprah a single penny to give her audiences lavish gifts, be it a Pontiac G6, 2012 Volkswagen Beetles, or thousands of dollars worth of other gifts.

But for the gifts recipients these free gifts could be a ride through the hell.

All because of IRS, the US Tax Agency.

In 2004 Oprah, presented her audiences a Pontiac G6 (now a company, erased from the face of the earth), but many of them had trouble accepting the gift, because the Taxes they would owe, if they receive the gift.

The gift promotion cost Pontiac about $3 million, her audiences cost sales tax and income tax, and cost to Oprah was zero.

On, November 22, 2010 Oprah again gave away 275 2012 Volkswagen Beetles. But this time she was able to negotiate “all taxes and fees” from Volkswagen with each car. So, her audiences will not have to pay any money out of pocket to receive the cars.

But another Tax they will be incurring is the income tax. They will have to add the total value of the car, all taxes and all fees and report it in their income tax return and pay tax.

It goes same for all other gifts too. The gifts are free. But you still have to report, the value of your diamond watch, cashmere sweater, cruise and all other gifts and pay tax to IRS.

If I am right, it would be Oprah’s company responsible to distribute the gifts and also hand out IRS approved income slip to each recipient and send a copy to IRS. Coming tax time, each recipient will have to report that income slip with their tax report.

I just read some news report that many Oprah gift recipient are planning to re-gift the gifts they will receive. Along with making someone else’s dream come true, that’s a very smart Tax Saving Strategy too.