Those increasingly valuable gift bags that are handed to Hollywood celebrities attending awards shows are certainly extravagant, but the IRS would like to remind the recipients that they are most decidedly not tax-free. Like any other gift, their value is taxable, and thanks to the horde of entertainment reporters in attendance at any awards show, the IRS knows exactly what the gift bags are worth, and who got one. “The value of the gifts must be reported on a celebrity’s tax return. They count as income because the IRS does not believe the gifts are given ‘solely out of affection, respect or similar impulses.'”