Follow-up on Nobel Prises and taxation
I did some checking and I gave the rules correctly as of 1974, when last
I had a course in law. I am not a lawyer.
Nobel Prizes, Pulitzer Prizes and many smaller less well-known prizes
were not taxable. The standard used was that if no work or other acts
were done fory whoever awarded them, not even filling out an entry slip
with just ones name or name and address, they were not taxable. They
were not earned income, since, though the recipient might have worked
for Monsanto or someone while doing the work that got him the gift, he
was already paid for that and he didn't do any work for the Nobel
Foundation or Committee.
However this changed in 1985,
Ronald Reagan signed a tax law that made scientific and academic prizes
The only way to avoid the taxes now is to give the money away before
receiving it, which is sometimes done, or perhaps to refuse the money.
Here's Publication 525
"Pulitzer, Nobel, and similar prizes. If you were awarded a prize in
recognition of accomplishments in religious, charitable, scientific,
artistic, educational, literary, or civic fields, you generally must
include the value of the prize in your income. "