Tom Brady's Super Bowl Sized IRS gift
“Tom Brady, now that you won the Super Bowl, what are you going to do?” Pay taxes???
The New England Patriots star quarterback Tom Brady had a typical feature day, throwing four touchdowns to lead the Patriots to a victory over the Seahawks in this year's Super Bowl XLIX 28-24. Given his stellar performance, the fans were not surprised to find out that he had won the Most Valuable Player award for the third time in a row. His prize for being the Super Bowl MVP? A brand-new 2015 Chevrolet Colorado. Being the man that he is, what does he do with another Super Bowl victory and the fame that goes with it? Brady stated he wanted to give his prize truck to Malcolm Butler, the undrafted rookie cornerback who made the defensive play of the game that would cause demise to the Seattle Seahawks.
Brady's generous gift is going to cost him a pretty penny in taxes both now and in the future. For now, assuming he is in the top federal tax bracket winning that $34,000 truck will add $13,464 to his federal tax liability plus some state tax liability.
There is also a gift tax liability to content with, and annual gifts to individuals in excess of $14,000 are subject to gift tax. However, unless Brady has already used up his lifetime gift tax exclusion, the gift, after subtracting the $14,000 annual allowance the gift will reduce his estate tax exclusion by $20,000 and thereby, sometime in the future, cost his estate another $8,000 in tax, the total tax on winning the truck and giving it away to $21,464 plus state tax.
We all know that both the winning and losing teams of the Super Bowl also get a nice bonus for reaching the big day. Members of the winning Super Bowl team can get a check for up to $97,000. Taking that into consideration and again multiplying by a 39.6% income tax rate, we see that just over $38,450 will belong to the IRS. Good ol' Tom Brady escaped being pummeled by the Seattle defense, but he cannot outrun this massive hit by our federal government.