Crowdfunding Comes With Tax Issues

Bad news, crowdfunders.

Tax professionals are saying that the Internal Revenue Service (and probably your friendly State tax collector) believe that all moneys you receive from crowdfunding is taxable income.

Guess what? That DVD reward, it’s considered a “sale” and subject to income tax and probably state sales tax.

However, if you’re in business and you have expenses (the cost of that DVD) that may offset the income received, you may not owe tax (but you didn’t make a profit either).

And, if rich daddy “donates” more than $14,000, he may have gift tax issues.

(Note: equity investments would not be taxable until their sale).

About JeffKoeppel

I am a corporate/securities attorney in the Washington, DC area. Prior to joining the firm, I was a Senior Attorney Advisor in the Division of Corporation Finance at the U.S. Securities and Exchange Commission. I am a member of the Bars of the States of Maryland, New York and the District of Columbia. You can also follow this blog on LinkedIn at:
This entry was posted in accredited investor, balance, Charity, checkbook, Congress, Crowd Fund Act, Crowd Fund Act of 2012, Crowd Funding At the Margins, Crowd Funding Platforms, Film, Funding Portals, Investments, Jobs, Legislative Intent, SEC, Small Business, technology, VC, Venture Capital, Wall Street and tagged , , , , , , , , , , , , , , , , , . Bookmark the permalink.

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