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Texas Tech Univ. School of Law

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Wednesday, November 28, 2012

Charlie Sheen Pays Off Lindsay Lohan's Tax Debt

Gift TaxAccountingToday has reported that Charlie Sheen has paid off half of Lindsay Lohan's tax debt or about $100,000 worth of the $233,904 in unpaid taxes for 2009 and 2010.. Sheen first offered Lohan to paid off a portion of her tax debt when the two were filming Scary Movie 5 and Lohan turned down the offer. After Lohan rejected Sheen's offer, she later recanted and accepted his offer. The question that now exists is how this will affect Sheen and Lohan's taxes. If Sheen does not declare the money to be a gift then Lohan will owe about $35,000 in income taxes. If Sheen chooses to declare the money as a gift then he will likely incur a gift tax on the amount in excess of his exclusion. 

See Michael Cohn, Charlie Sheen Pays $100,000 of Lindsay Lohan's Tax Debt, AccountingToday, Nov. 27, 2012.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

http://lawprofessors.typepad.com/trusts_estates_prof/2012/11/charlie-sheen-pays-off-lindsay-lohans-tax-debt.html

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Comments

There'd only be a taxable gift if Sheen had used up all of his $5.12MM unified credit. Whether he reports the gift or not doesn't impact his tax liability.

Posted by: jpe | Nov 28, 2012 6:43:27 AM

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