here is the buttercream version
http://www.make-fabulous-cakes.com/gift-box-cake-tutorial.html
When I made mine in fondant, I just cut a square on inch larger on all sides and laid on top of the original fondant and just folded my ends like when you wrap a package
but here is another way
http://www.semihomemade.com/entertaining/01_tiffany.htm
hth
Thank you, I think I'll try your technique I think it will look more realistic
Some do the fondant over the cake pan (like I did in my Tiffany Box cake -- see my pix.) Some do gumpaste over the cake pan. Some do fondant over styrofoam. There's also a thread called "my hatbox instructions" that's a sticky in one of the forums you might want to check out. As always there's also Sugarshack's Boxes and Bows DVD which is very helpful too. Good luck! 
Here's that hatbox thread link: http://cakecentral.com/cake-decorating-ftopic-215781-0.html
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