The weird, contentious tradition of Oscars gift bags, explained

For 88 years, the Academy of Motion Picture Arts and Sciences has been handing out gold statuettes to honor the best movies Hollywood has to offer. And since the early 2000s, the (rich, beautiful, talented) winners and losers alike have been going home with thousands of dollars' worth of free goods.

These gift bags are one of the weirdest and most ostentatious traditions to spring up around the awards show — one company’s 2016 bags contained items worth $232,000, and even prompted the Academy to sue that company. So what's the deal with the bags? Here are five things to know, with bonus insight from the self-appointed "Sultan of Swag" who puts them all together.

What are these gift bags?

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Remember when you went to birthday parties as a kid and the birthday kid’s parents would hand out loot bags at the end of the party? This is basically like that, but pumped full of steroids and ridiculous amounts of cash. These gift bags are collections of stuff — skin care products, snacks, vacations, spa services — that are given to certain attendees of the Academy Awards. The Academy of Motion Picture Arts and Sciences gave them out to Oscars performers and presenters starting in 2001, but stopped after a crackdown by the IRS (more on that later).

That left a void in the gift bag world that private companies happily rushed to fill. These days, the most buzzed-about gift bags come from a company called Distinctive Assets, which for the past several years has handed out "Everyone Wins at the Oscars" gift bags to the nominees in the Best Actor/Actress, Supporting Actor/Actress, and Director categories, plus the host.

Distinctive Assets founder Lash Fary — the aforementioned "Sultan of Swag" — told Vox last year that Oscar nominees love his gift bags because his company makes it easy for them to get. “We roll it right up to their house, their production company, or in the case of Leonardo DiCaprio, their hotel.”

What's in the bags?

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A whole bunch of things, some of them much weirder than others. This year, Distinctive Assets’ bag includes edible items like fancy chocolates and designer “non-browning” Opal Apples; skin care and makeup products; personal training sessions; diamond jewelry; and even oddly personal things like underarm sweat patches and “SweetCheeks cellulite massage mats” (really). There are also items for nominees’ children and/or pets, including a dog mattress and a “Curlee Girlee empowering children’s book,” as well as personal CPR training for celebrities who want the “priceless opportunity to save a life” (emphasis theirs).

Plus, there's usually at least one trip — the 2017 bag includes a six-day luxury jaunt to Hawaii, and past gift bags have included vacations to places such as Japan, the Caribbean, Las Vegas, and Turks and Caicos.

One of the more controversial past items was the 2016 bag’s $55,000 vacation to Israel, which Fary says came about from ExploreIsrael.com offering an all-inclusive, first-class package that was simply too good for him to ignore. But it prompted protests from groups like the US Campaign to End the Israeli Occupation and Jewish Voice for Peace, which ran an ad in the LA Times reading, "#SkipTheTrip. Don't endorse Israeli apartheid."

Fary was unfazed by the controversy, however. "You are talking to the world's dumbest American when it comes to politics," he told Vox last year. "It didn't even occur to me that there could be an issue."

The value of the bags has trended upward over time, ranging from $20,000 in 2002 to a high of $232,000 in 2016. (Fary declined to give hard numbers for this year’s bag, simply saying the value is in the six figures.) As Fary told Vox, that's largely thanks to the trip packages, which have been more of a recent development for the bags. Their worth dipped a bit during the recession, but still equaled what many people would consider a pretty healthy yearly salary — plus, as Fary astutely told Today, “I am confident that having a $48,000 gift bag vs. a $58,000 gift bag will go unnoticed by Amy Adams, Hugh Jackman and Jennifer Lawrence.”

Why give all this free stuff to celebrities who are already rich?

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Marketing, basically. Brands have an opportunity to gain huge exposure through putting their products in the gift bags. And they're willing to pay a heavy price for it: Entrepreneur estimates it can cost between $5,000 and $20,000 for a brand to place its products in the Oscars swag bag. But the payoff can be worth it; A-listers actually using a brand's products can do more for business than expensive advertising — even advertising that features celebrities. (That's also why "gifting suites" exist, which are a whole other animal entirely.)

Occasionally, celebrities are required to turn down gift bags because they have signed conflicting endorsement deals. Others give theirs away; George Clooney opted in 2006 to donate his bag to a United Way charity auction, where it sold for $45,100. And still others object to the mere idea of gift bags on moral grounds — in 2007, Edward Norton called them “disgusting and shameful,” suggesting that the Academy instead make a charitable contribution in winners’ names. (For what it's worth, Fary told Vox that his friend at the Grand Hotel Tremezzo had a lovely time hosting Birdman nominee Norton and his wife after they redeemed a trip from 2015’s gift bag.)

Celebrities are under no obligation to accept the freebies, of course. But Fary told LA Weekly most of them are pretty on board with the idea: “Only one person has ever refused to accept the bag, and that was Sandra Oh. ... On the other hand, ‘Other celebs like Diane Keaton have sent lovely notes.’”

Are the gift bags taxable?

Yes. Under the federal tax code, the contents of these gift bags, including trips and services, are taxable as income. In 2006, the Academy decided to stop handing out gift bags after the IRS cracked down on taxing the contents, because, as Academy spokesperson Leslie Unger said, “It seemed a little inappropriate to offer a gesture of thanks that then carried with it a [tax] obligation.” The Academy and the IRS reached an agreement that let recipients before 2005 off the hook for paying taxes, but 2005 gift recipients received the nice surprise of a 1099 form in the mail.

Though Distinctive Assets’ gift bags are not in any way affiliated with the Academy, their contents are similarly taxable. But as US News’s Susan Johnston Taylor explains, celebrities have a few options to avoid paying taxes on the bags: They can donate all the stuff to charity, turning their gift bag into a tax write-off; they can keep some and sell or donate the rest; or they can simply refuse to accept the gifts altogether.

Didn't I hear something about a lawsuit?

In 2016, the Academy filed suit against Distinctive Assets, claiming the latter's gift bags constitute trademark infringement and damage to the Academy’s reputation. The bags that year includes a few items the Academy deemed “unsavory,” such as marijuana vape pens, sex toys, and a “vampire breast lift,” which the Academy apparently didn’t want to be linked with in the media.

There's also the fact that such lavish displays of excess, even if not officially linked to the Academy, are bad optics for an organization that has come under fire in recent years from the #OscarsSoWhite movement and other diversity-oriented groups.

But as Bryan Bishop at Vox sister site The Verge pointed out, the Academy's pushback against Distinctive Assets’ elaborate gift bags “wasn’t the Academy taking a principled stand; it was the Academy striking back because it didn’t like the products it was being associated with.” In other words, the core issue — that hundreds of thousands of dollars’ worth of goods are being given to people who are already very rich — has nothing to do with the Academy’s ire.

In April 2016, LA Business News reported that the Academy and Distinctive Assets had reached a settlement in the suit, agreeing, among other restrictions, that Distinctive Assets would not use the Academy’s trademark and would provide a disclaimer that disavows any affiliation between the two organizations. (That disclaimer, in bold type atop the press release announcing this year’s bags, snippily notes, in part, “Neither the Academy nor Distinctive Assets want there to be any association between the ‘Everyone Wins’ Gift Bags and the OSCARS® or the Academy.”)

Thus, after this year’s Academy Awards are over, certain nominees will go home with an expensive participation prize. So if Meryl Streep’s 20th Oscar nomination doesn’t net her a fourth gold statuette, she can at least console herself with some fancy apples and CPR training.

Updated with additional clarification that there is no relationship whatsoever between the Academy of Motion Picture Arts and Sciences and any company that distributes gift bags to Oscar nominees. Truly. No relationship whatsoever.

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