According to a tax attorney friend of mine in NY, it SHOULD be considered a gift, with the tax paid by the program. However, the IRS seems to like to call it income - with the tax to be paid by the receiver.

The gift bags (yes, that's GIFT bags) given out at the Oscars are treated as income to the receivers. My tax attorney friend can't figure out why a gift should be treated as income. The IRS makes the obvious distinction, then doesn't seem to follow their own rules.

I'd really be interested in knowing how it works. Same issue with the big-time home makeover shows. One of the last ones I saw, the family got a huge new house (completely furnished) and new F250 HD edition, and the father got a monster shop completely set up with a lift and stocked with Craftsman tools. The whole deal had to be a half-mil. There's no way they could have paid the taxes without selling the house.