And is there anything left that does not affect interstate commerce?

The question arises because the U.S. Constitution did not give Congress the power to legislate generally, over any subject, but only over the subjects listed in the Constitution, one of which is the regulation of interstate commerce.

And so, in S. 909, the "Matthew Shepard and and James Byrd Jr. Hate Crimes Prevention Act," which yesterday became part of the 2010 defense appropriate act (S. 1390), Congress dutifully found that violence motivated by bias "affects interstate commerce."

Really? 

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Back in September, it was reported that a dinner with former Alaskan governor Sarah Palin was being auctioned by charity on eBay with a minimum asking bid of $25,000.

That was sort of funny.

It was later reported that the winning bid was $63,500, from a woman in Alabama.

That was less funny, and less widely reported.

But the tax consequences were apparently not thought about, because she might have realized taxable income of $63,500 with nothing to show for it.

There is a sometimes-overlooked tax regulation that states that you don't realize income by providing services to a charity, but that you do realize income by providing a service to someone else who then pays the charity for that service.  (Treas. Reg. 1.61-2(c).)

If Sarah Palin had charged someone $63,500 to have dinner with her, she would have $63,500 of income, and she could later donate that money to charity and claim a charitable deduction subject to the limits on charitable deductions (usually 50% or 30% of adjusted gross income).  The point made by the regulation, and by various rulings issued by the Internal Revenue Service, is that Palin can't avoid that result by assigning the right to have a dinner with her to a charity and letting the charity collect the money.  As the Supreme Court first ruled back in 1930, the law taxes incomes "to those who earned them."  Lucas v. Earl, 281 U.S. 111, 114 (1930).

So Palin should report the $63,500 as income, and then claim a charitable deduction for the same amount.  If the charity is a "public charity" described in IRC section 170(c)(1), and she has at least $63,500 of other income, with no other charitable deductions, it might be a "wash," because she will also be entitled to a charitable deduction of $63,500 for the money that was (after all) paid to charity.  But if she doesn't have that much other income, or if she claims other charitable deductions, it's possible that her charitable deduction will be less than the income realized, and she will end up having to pay federal income tax on money she didn't actually receive.

Will she?  And will the IRS notice if she doesn't bother to report that income?