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IRS Website FAQ on gifts...

Q: What is the gift tax?

The gift tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. The tax applies whether the donor intends the transfer to be a gift or not. The gift tax applies to the transfer by gift of any property. You make a gift if you give property (including money), or the use of or income from property, without expecting to receive something of at least equal value in return. If you sell something at less than its full value or if you make an interest-free or reduced-interest loan, you may be making a gift.

Q: Who pays the gift tax?

The donor is generally responsible for paying the gift tax. Under special arrangements the donee may agree to pay the tax instead. Please visit with your tax professional if you are considering this type of arrangement.

Seems pretty clear cut there; the donor pays the tax on the item, not the one receiving the item. The only thing that would make sense to me is if the IRS is determining that these aren't gifts, but instead, are prizes. It'd make an interesting court case.

Any time my husband 'won' a 'free' anything (trip, tv or other toy) in a sales contest, we pay taxes on the value of the 'freebie'. ALways have.

That's why often folks who win cars, or the HGTV home contest, often sell the prize because they cannot afford the taxes.

I understand that the last couple winners of that home (I think it was HGTV contest, not positive) sold the home because they could not afford the taxes and probably not the upkeep either -

I think it is grand that they are finally getting the recipients of the oscar freebies. After all, if you hit a jackpot in Vegas, the IRS is right there to collect its share of the prize.