09-06-2007, 02:21 PM | #1 |
Senior Member
Join Date: Jun 2004
Posts: 315
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Donations, MUDs, and taxes
Could someone donating a couple of thousand dollars to a mud get a tax discount in the US?
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09-06-2007, 02:29 PM | #2 |
Legend
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Re: Donations, MUDs, and taxes
My guess is: Only if that MUD is under the auspices of a non-profit organization.
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09-06-2007, 02:49 PM | #3 |
Member
Join Date: Jul 2007
Home MUD: Lost Souls
Posts: 199
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Re: Donations, MUDs, and taxes
In the US, not just any non-profit organization, but a 501(c)(3) tax-exempt non-profit organization. If a donator could claim a tax break, the MUD owners would definitely know about it from all the hoops they had to jump through to get the requisite status with the IRS.
The donator self-incorporating as a game development consultant and writing off the donation as a business expense would, at least, involve less paperwork. By the way: I am not a lawyer. Do not listen to me or do as I say. About anything. |
09-06-2007, 03:32 PM | #4 |
Legend
Join Date: Sep 2002
Location: Mill Valley, California
Posts: 2,305
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Re: Donations, MUDs, and taxes
Keep in mind that you cannot donate money to a MUD. You can donate to a person or other legal entity only. MUDs don't have income. Companies and people do, so giving a couple thousand to person A is just giving a couple thousand to person A, regardless of what person A chooses to spend it on. The I.R.S. will (though I'm not an accountant) just see it as a gift of $2000, taxable as any other gift is taxed on the recipient, and not deductible from the giftor's end.
--matt |
09-06-2007, 05:06 PM | #5 |
Legend
Join Date: Aug 2007
Name: NewWorlds
Home MUD: New Worlds
Posts: 1,425
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Re: Donations, MUDs, and taxes
If you want a tax break for playing and paying, open an sole-proprietorship or LLC and mark your game time as entertainment and/or research. Shazam!
(Disclaimer: This is in no way tax advice, please consult a certified public account). |
09-06-2007, 07:09 PM | #6 |
Legend
Join Date: Sep 2002
Location: Mill Valley, California
Posts: 2,305
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Re: Donations, MUDs, and taxes
I would certainly consult a CPA before attempting that strategy. The IRS may be a behemoth, but it is not stupid, nor do you really want its attention.
And just keep in mind that even though losses from LLC/partnerships or sole-proprietorships flow through to the owner/owners, a business is not permitted to just generate losses without good faith efforts to generate revenue as well. --matt |