Taxation of Celebrity and Presenter Gifts

My wife and I stayed up late tonight to watch MTV's Video Music Awards.  I got to thinking about some articles that I read a few years back about all the swag that tpresenters get for participating.  All of their swag is considered taxable, though it is difficult to gauge the value. (More after the cut).
The IRS includes anything in income that is considered an "ascention to wealth," or  "found treasure."  An agressive interpretation of tax law would consider these gifts to be in exchange for labor, and therefore subject to self-employment tax.  Examples of swag include:

• Bertolli Oven Bake Meals
• Nespresso LeCube Coffee Machine
• Hydrofillia Body Lotion
• Palm Centro Cel Phones and Accessories
• D’Annunzio Fine Jewelry\
• Miscellaneous Clothing
• Tons of other stuff

The presenters now have to put some value on these items and give the recipient a 1099 for the value of the swag.  The recipient can take a discount for the FMV that is on the 1099, depending on what s/he does with the items.  For example, if the celebrity turns around and sells the item for $500, but the value included in the 10000 is $1,000, there is an obvious discrepancy between the perception of the fair market value, and the true fair market value. 

Many recipients donate their items to charities.  In that case, the celebrity would have to include the FMV of the item in income on Line 21 of Form 1040 and then claim a charitable contribution to offset the income.  This treatment can result in a limited or reduced deduction due to the itemized deduction reduction or AGI limitation of charitable contributions. 

If you are a celebrity and need tax advice, what are you doing trying to find it on a blog?  If you really need help, feel free to call me.  I probably won't believe that you are who you say you are, but try it anyway!

Other Commentaries:

• Celebitchy
• ABC News
• Forbes
• TaxProf Blog (Paul Caron, Esq.)