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Old 09-06-2007, 02:21 PM   #1
scandum
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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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Old 09-06-2007, 02:29 PM   #2
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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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Old 09-06-2007, 02:49 PM   #3
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Cool 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.
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Old 09-06-2007, 03:32 PM   #4
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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
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Old 09-06-2007, 05:06 PM   #5
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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).
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Old 09-06-2007, 07:09 PM   #6
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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.

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