I was watching Top Chef Masters and I ahd a question. I know you have to report your winnings on a game show. On the Masters version, the chefs don’t get the money because it goes to charity. My question is can they take a tax deduction?
I haven’t seen Top Chef: Masters all season so I made an effort to catch up a bit tonight after reading your question.
In the Masters edition, the cheftestants (yes, I’m using that word even though I hate it – but only once) win money for their respective charities. The amounts vary, depending on the type of challenge (for example, quickfire challenges tend to be worth less than the elimination challenges).
Clearly, I’m not privy to the terms in the contracts that these folks sign so I’m going to speculate. Normally, as you pointed out, winnings from a game or TV show are taxable (just ask Richard Hatch). In this case, however, the chefs don’t receive the winnings since they are donated to charity.
If it works as portrayed on TV, there should be no charitable deduction for the chefs. The chefs don’t actually receive the funds (or directly control the funds) so they should never take it into income. In order to claim the deduction from a donation made from these winnings, the chefs would have to first claim the winnings and then make the donation. That isn’t what appears to happen on Top Chef: Masters. It appears instead that the chefs earmark a charity to receive their winnings, if they have any, and that selection is irrevocable. The money is then paid over directly to the charity. The chef doesn’t have the option to limit the amount of the payment or change the named charity.
Bottom line: I don’t think they claim the income or the deduction. I think appearing on the show is a fairly tax neutral event for the chefs. But if someone in the know has different info, do tell.
Like any good lawyer, I need to add a disclaimer: unfortunately, it is impossible to offer comprehensive tax info over the internet, no matter how well researched or written. And remember, I love my readers but having me bookmarked on your computer doesn’t make you a client: before relying on any information given on this site, contact a tax professional to discuss your particular situation.