Space tourism and the tax man

Posted by Daniel Pendick
on Friday, February 16, 2007
 
The C2 suborbital spaceship will take a contest
winner 62 miles (100 kilometers) above Earth’s
surface for a brief joyride. Space Adventures, Ltd.

As ordinary citizens jump into the Space Race, they may notice the tax collector following in hot pursuit. People are starting to win "free" rides into space, like the one sponsored by Microsoft and AMD I mentioned in a previous blog.  Trouble is, under U.S. tax law, contest winnings are taxable income. And with suborbital space-tourism rides currently valued in the hundreds of thousands of dollars, paying the taxes — a very down-to-Earth concern — is keeping some people, well, down to Earth.

Take Brian Emmett, for example. The 31-year-old software consultant was thrilled to win a contest sponsored by software giant Oracle and space-tourism start-up Space Adventures. But faced with having to pay about $25,000 in taxes on the $139,000 value of the ride, he was forced to decline his winnings. But recently, another space-tourism startup, Benson Space Co., offered to pay Emmett to ride for free as a "test passenger" in 2008. So he may be going to space after all, assuming Benson Space makes it off the launch pad.

Now let's offer a warm round of cyber-applause for William Temple of Sacramento, California, winner of the aforementioned Microsoft/AMD "Vanishing Point" puzzle contest. Reportedly, Temple will also receive $50,000 with his flight, which should inoculate him from the tax issue.

If any of our readers in the United Kingdom would like to join the space-tourism race, Audi and New Scientist magazine are sponsoring one. It is part of an effort to promote AUDI's new A6 sedan. To enter, you need to write a 250-word essay on what you think is the world's best patented invention of all time, and why. (I'm guessing that if you answer, "the 2007 Audi A6 Avant," it might be deemed less than imaginative.) Best of all, British tax laws don't require people to pay tax on contest winnings. The contest deadline is April 30, 2007; the winning essay will be published in New Scientist June 2.

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