That other inevitability

On Friday it was death, and today it’s something that is equally inescapable: taxes. The AP has an article about Brian Emmett, who won the grand prize Oracle Space Sweepstakes in 2005, a suborbital spaceflight. Problem is, Emmitt was facing a $25,000 tax bill based on the value of the prize, a bill he couldn’t afford. So, Emmitt had to forfeit the prize.

While the AP article about this hit the wires Sunday, it’s not a new development. In a post on his personal blog from September 2006, Emmitt noted that he gave up the prize back in March after calculating his tax bill and discussions with Oracle. “This was probably one of the toughest decisions I’d made in my life so far. Turning down the ability to realize a childhood dream when it’s so f—ing close you can touch it is really impossible to put into words,” he wrote.

While this is an unfortunate case, it appears to be the exception to the rule. Most other spaceflight prizes, such as the one announced this month by Microsoft and Rocketplane Kistler, include cash awards in addition to the flight to cover the tax bill; that wasn’t the case with the Oracle award. On the bright side, it could have been worse: the prize was valued at “only” $138,000, considerably less than the current going rate for flights on Virgin Galactic and most other suborbital operators.

3 comments to That other inevitability

  • Ferris Valyn

    Anyone know how Spaceshot is handling the tax issue?

  • Charles Lurio

    Space Shot Inc., (Now at the website covers the tax with a cash prize also.

  • Our cash co-prize for suborbital is $100k. Microsoft’s $50k cash-coprize for their $253,500 prize will, like Oracle, leave their winner in the hole as much as $35k. People in the $250k+ tax bracket pay 35% taxes. If the winner flies in the first six months or in the front seat, it’s $303,500 including the tax gross up check which is taxable. That leaves the winner needing to cough up another $50k. We’ll see how this develops. The winner might declare only the wholesale price, might sit in the back seat, might defer delivery until the flight’s cheaper or might shop around for a discounted seat from all the sources to tell the IRS a different value.

    There are several ways that have not yet been explored to defray income taxes for prizes. One would be for the prize recipient to promise to repay the prize giver in which case, it’s just a loan. This is one of the ways how politicians avoid paying taxes. Another is to do some science or business a la Greg Olsen. A third would be to ask RpK or NASA to hire you to be an astronaut a la John Glenn.

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