There are folks posting software, for which they do not REQUIRE payment for use, but they do leave themselves open to receiving donations.
I ASSuME that all such donations are taxable as income?
When are donations not taxable to the receiving party?
Feb 07, 2008
5 Replies
First reply
Correct! "A rose by any other name would smell as sweet." or stink. ChEAr$, Harlan Lunsford, EA n LA
Read the full reply
Correct!
"A rose by any other name would smell as sweet."
or stink.
ChEAr$, Harlan Lunsford, EA n LA
Yes, most likely as Other Income. Losses or expenses on hobby income are deductible as negative income; but if the net hobby income is less than zero (meaning that expesnses are more than income), the net income should be changed to zero.
Calling it a donation does not make it so. A donation is a non-reciprocal transfer and that is not the case with shareware.
-Crystal
Right. It's similar to restaurant tips. The IRS considers them not to be gifts, but to be something given in relation to a business transaction. As such they are taxable.
Stu
Sorry for the wrong advice, after reading the IRS publication, I see that most deductions are reportable on Schedule A, subject to the 2% of AGI limitation, and of course you have to be itemizing to claim the deduction if any.
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