6 ms·

As I read the article, it's not about raising money---it's about the exchange/the transaction. By offering "rewards" on KS, you're making a sale.

• einhverfr 14y ago
  The point has to do with what you are exchanging. In general you are going to only gain money in these cases in one of three ways: 1) Sale of a good or service (direct or indirect). This is income and if income exceeds expense, will increase taxable income. If income does not exceed expense then as a fundraising effort it is a failure. 2) Sale of equity. This is not income. It's a straight asset/equity swap. This can be done crowdsourcing too due to recent regulatory changes. 3) Sale of promissory notes. This is not income. It's a straight asset/liability swap. I would be surprised if you could go out and sell bonds on street corners but if you could it too would not be income unless you were paying back less than what you sold it as which isn't usually the way these things world.
  • rprasad 14y ago
    Actually, you just provided 3 taxable transactions. The sale of equity is taxable as income to the seller. I believe you actually mean the issuance of stock by the corporation in exchange for contributions of cash or other property to the corporation. This is not a sale, nor is it taxable. See Sec. 351. The sale of debt is income to the seller. I believe you mean the issuance of debt by the corporation in exchange for a loan of cash or liquidable assets. This is not a sale. Note that income is not a matter of gain or loss. You can sell something for a loss and still have income. However, gain or loss is relevant to the determination of how much in taxes you pay for the year. That discussion could fill entire hard drives.