Crowdfunds Taxed As Income

So, what is it?

If you crowdfund for “donations” on Kickstarter and promise rewards, is the money received income or an “investment.”

Tax authorities have recently determined that those funds represent income and you owe tax on it.

That’s what happened to the non-profit Lunar Mission One after it raised over $1 million promising to put donor’s DNA on the moon.


That quid pro quo represented, according to Her Majesty’s Revenue & Customs authority and they billed the company for ¬£90,000 Value Added Tax.

LMO took the case to tax court and quickly lost.

They now plan to appeal claiming that the funds was capital not income.

But their project has run out of money and is now stalled.

The moon is safe for now.

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:
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