Back in January, Wesley Autrey did a selfless, good deed: He placed his life at risk to rescue a teenager who had fallen onto subway tracks in New York City. And in return, he's received cash, scholarships for his daughters, a trip to Disney World, theater tickets and other items. And now, at this post, tax professor James Maule of Mauled Again considers whether Autrey can expect something else, not quite as nice: a tax bill from the IRS.
The issue boils down to whether the benefits bestowed on Autrey are rewards or gifts, because rewards constitute gross income under the tax code. But how does one distinguish between the two? According to Maule, the IRS regulations that require inclusion of rewards in gross income do not define reward nor make distinctions between the circumstances under which they are offered and collected.
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