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Level 1

Crowdfunding - What are the rules on nontaxable "Gift" donations to a Kickstarter?

As my business partner and I prepare to launch our business, we're also narrowing down on how we want to go about funding the big start-up costs. We are very interested in crowdfunding, but we don't want to be stuck with the tax bill on income generated from kickstarter sales (that is, of course, if we do a product exchange for the backers). We're thinking about going the nontaxable gift route on kickstarter and not give away products. We understand (from some of our research) that there's a rule around if a backer were to donate $14,000+ that it could then be subject to the gift tax. However, is that rule applied only if one individual were to donate $14k? Or, does it apply if we raise $14k in donated funds? I know I can't really receive tax advice here, but I'm wondering if anyone can give a clear answer to this option and maybe some things to consider. 

 

Thanks in advance! 

1 Comment
Level 15

Crowdfunding - What are the rules on nontaxable "Gift" donations to a Kickstarter?

Any one person can gift up to 14K a year to any other person.  I doubt that applies to gifting to a business, check with a tax accountant.   If the gift was to you personally, then you could invest the funds into the business as equity.

 

If the giver exceeds 14K  a year to one person, there is a hefty gift tax the giver would have to pay.

 

Check with a tax accountant, tax laws do change they stay up on them

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