Olympic gold metals are assessed for income tax, but the real cost could be the estate taxes.
Every time the Olympics come around, there’s dozens of articles and posts about how Olympic medals are subject to income tax. The IRS considers all prize winnings, such as gambling or game show prizes, to be income and thus taxable. Olympic medals get lumped into this group (as do the cash bonuses they come with). Luckily for the athletes, their medals are valued at the time they are earned, essentially the value of the materials. A gold medal from Rio is estimated to be worth $564, a silver medal is estimated at $305, and a bronze medal has little intrinsic value. Since Olympic medalists generally treat their sport as a profession the value of the medal and related bonuses are likely to be offset with a deduction for the significant expenses that most athletes incur.
What people may fail to consider is the effect the medals will have on the Olympian’s estate taxes. Property in an estate is valued at the date of death, not the original value. And though Olympic medals have little intrinsic value, their sentimental value makes them worth far more. In 2013, one of Jesse Owens’ medals from the 1936 Olympics in Berlin sold for $1.47 million, the highest price ever paid for a piece of Olympic memorabilia. A boxer from Ukraine, Wladimir Klitschko, sold his medal for $1 million. Even a medal from an athlete who isn’t as well known may be valued upwards of $30,000. These values are included in a deceased Olympian’s estate and are potentially taxable.
Michael Phelps broke a 2100 year old Olympic record by winning 13 individual gold medals over the course of four Olympics (not to mention his 28 medals total.) The medals are worth quite a lot on the open market, even if Phelps is only initially taxed on their intrinsic value. When he dies, his estate will likely need to hire a specialized appraiser to determine the value and even then, it will only be an educated guess. Of course, since Michael Phelps is superhuman, he may never die, which would make this whole process simpler.