IRS Issues Information Letter on Crowdfunding
Whether by donating to a sick child or investing in the next great product, many of us have contributed to crowdfunding campaigns through websites such as Kickstarter and GoFundMe. Crowdfunding is essentially raising nominal monetary contributions from a large number of people, generally via the Internet.
- Loans that must be repaid.
- Capital contributed to an entity in exchange for an equity interest in the entity.
- Gifts made out of detached generosity and without any quid pro quo. A voluntary transfer without a quid pro quo isn’t necessarily a gift for federal income tax purposes.