In theory, does the law require children to pay income tax on the candy that they receive on October 31?

Question by StephenWeinstein: In theory, does the law require children to pay income tax on the candy that they receive on October 31?
The IRS maintains that, even if no money changes hands, the fair market value of things that a person wins or receives in a bartering transactions is subject to income tax.

The IRS also maintains that entertainers and models are required to treat what they do as “work” for tax purposes, even though it is not work in the conventional sense.

The IRS also maintains that “tips” are taxable, even though the customer is not required to give tips, and they are (from a legal standpoint, if not a tax standpoint) more a gift than money due for services.

Therefore, it would seem as though someone who puts on unusual clothing for others to see, and gets something of value in return, would have to pay tax on it.

Does the tax code actually have an exemption saying that candy that children receive from strangers for dressing up and going door to door saying “trick or treat” is not subject to income tax? Or is nearly every child in the country violating the tax code by not reporting the fair market value of the candy?

Best answer:

Answer by Dave
wow you’re sooooo clever.

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In theory, does the law require children to pay income tax on the candy that they receive on October 31?

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