On Sunday the 94th Academy Awards will be held. While Hollywood stars throng Los Angeles’ Dolby Theater hoping to walk out with Oscar statuettes, 25 nominees will get a gift bag valued at just $137,000.

LA-based Distinctive Assets distributed the “Everybody Wins” gift bags to five of the nominations for each category and to the nominees as “Best Director”. The gift bag includes gifts that include everything, from $10,000 worth of cosmetic surgery to gold-infused olive oils.

Acceptance can lead to a heavy tax burden on the recipient.

Gift bags that are not “gifts” are taxable because they were not given out “solely of affection, respect or comparable impulses for recipients,” as per a citation. dedicated pageOn the IRS website, you can find information on gift bags for members of the entertainment business.

It is important to ask yourself, “What’s the purpose of offering those products and services?”It is obvious it’s in the hopes that the celebrity will use the product. Eric Bronnenkant of Betterment’s tax department tells CNBC Make It. They’re trying influence behavior.”

On the recipient’s taxes, the gift value is considered income. Bronnenkant says that California’s high income earners, including many Hollywood stars, can face a 50% tax rate.

Due to IRS inspections, the Academy stopped gift-bag distribution to performers and presenters in 2006. It seemed inappropriate to give a gesture in thanks, which then carried with it an IRS inspection. [tax]An Academy spokesperson stated that obligation is a requirement told CNN in 2006.

Distinctive Assets is not affiliated with the Academy, but has been mailing gift bags since 20 years. Each of the recipients — which this year include Will Smith, Penelope Cruz and Olivia Colman — receive a form that founder Lash Fary crafted with a tax attorney explaining that business gifts are taxable and that they should consult their tax professional about it, Fary tells CNBC Make It.

Fary also pointed out that, despite their incredible total value, most of the gifts in the bag are not tax-deductible and should be used by the recipients. 

“[Some articles]Make it seem like you are carrying $140,000 worth of cash in a briefcase and giving it to nominees,” he said. In fact, $3,000 of the $137,000 was actually $5,000. [value]These are physical items that the recipient can pick up and either put in their pantry or give as a gift to their mother or child. Rest are offers or invitations that do not have a taxable effect and which they must redeem. 

The most costly offer this year is an all-expenses paid trip to Turin Castle, Scotland. The offer is open to all guests who agree. They will be able to access the castle from 17 century, with butler service and bagpiper greeting them upon arrival. This three-night stay costs $50,000.

We’ll assume Will Smith won’t make the trip. Fary states that his bag doesn’t have a value of $137,000, but it is worth $137,000 less $50,000. If he doesn’t visit the Golden Door, it’s an additional $15,000 off. Maison Construction offers home renovation services at $25,000 more. 

Fary claims that no Oscar nominee has received a gift basket with the same value in 20 years of giving them.

Fary says that while a number of trips can be redeemed and some have been redeemed for cash, no one ever redeems everything.

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