On Table I2-2 of your textbook there is an important list of various types of income that are EXEMPT from tax. One of the best ways to get rich and not pay taxes is to receive a gift. Whether someone gives you $100, $10,000, $100,000 or even $1,000,000, you, the gift recipient, do not have to pay any income tax! The donor, the person who is making the gift, MAY have to pay something called a gift tax tax--depending on how much money they give away and several other factors. One gift tax safe harbor is the 2014/2015 $14,000 exemption amount (It was $13000 and $12000 for the past few years and $10000 for many previous years. The amount of the exclusion changes peridically and is indexed for inflation.) In a nutshell, you can now give any one person up to $14,000 per year and be completely free from the gift tax rules. There are many other ways to give away money and escape the gift tax but you must be very careful if you are going to give someone more than $14,000 in any one year. The estate and gift tax rules are very complex and are beyond the scope of this course, but here is an interesting issue for you to consider and discuss.

OK, sports fans. What famous event happened on September 8, 1998?

Mark McGwire hit his record breaking 62nd homerun!

Then, Mr. Tim Forneris, the groundskeeper at Busch Stadium recovered the ball and gave it back to McGwire. Before this happened, a memorabilia collector had promised $1 million to anyone who would sell him the famous, much-anticipated 62 homerun baseball. By giving the baseball back to Mark McGwire, some tax experts have argued that the groundskeeper made a $1 million gift to McGwire and that the groundskeeper should have to pay a large gift tax! Does this make sense? Also, if you had caught the baseball, would you have given it to McGwire or would you have sold it to the collector for a cool million? If you did sell it to the collector, would you be subject to tax on the $1 million? Let's chat it up and support your opinions and reasoning with tax facts! Batter up!