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I've seen on some torrent trackers that offer a way to pay and call it
a donation. In exchange for donating they give you download ratio or
bandwidth. I don't understand how this differs from just calling it a
sale? Is it just wording? What's the legal difference, are they not
taxed if it's called "donation"?
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jaedendak@gmail.com wrote:
I've seen on some torrent trackers that offer a way to pay and
call it a donation. In exchange for donating they give you
download ratio or bandwidth. I don't understand how this differs
from just calling it a sale? Is it just wording? What's the
legal difference, are they not taxed if it's called "donation"?
I don't understand the issue. Are you talking about a qualified
nonprofit organizaiton? Or exchanges among friends? Or between
parents and kids? The context and the precise facts are essential to
determine what's going on, and if it is proper.
Unless it's a qualified nonprofit, any "donation" related to business
is taxable, if that's what you mean. If it is a nonprofit, and the
sale is related to its exempt purpose, it's not [income] taxable
anyway. So having it be a donation in that situation doesn't help
anything.
Stu
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jaedendak@gmail.com wrote:
I've seen on some torrent trackers that offer a way to pay and call it
a donation. In exchange for donating they give you download ratio or
bandwidth. I don't understand how this differs from just calling it a
sale? Is it just wording? What's the legal difference, are they not
taxed if it's called "donation"?
They probably don't have the right to 'sell' what you are downloading.
What you are buying if I"m right, is enhanced access to stolen goods.
-paul
ianal
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On Tue, 15 Apr 2008 07:58:07 -0400, jaedendak@gmail.com wrote:
I've seen on some torrent trackers that offer a way to pay and call it
a donation. In exchange for donating they give you download ratio or
bandwidth. I don't understand how this differs from just calling it a
sale? Is it just wording? What's the legal difference, are they not
taxed if it's called "donation"?
I don't know. I haven't come across your two examples, but I've been
to parties and dances and carnivals in the US where the admission fee
is called a donation. This were given by non-profit, maybe charitable
organizations, and I assumed they were not allowed to sell things or
lose their tax status.
I don't know what a torrent tracker is either (what is it?), but who
is providing the download ratio. Is it a non-profit?
And is the exchange a sale?
If you are inclined to email me
for some reason, remove NOPSAM :-)
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In article <iv4904h75g1r303sq7km7nv9u95jj11u79@4ax.com>,
<jaedendak@gmail.com> wrote:
I've seen on some torrent trackers that offer a way to pay and call it
a donation. In exchange for donating they give you download ratio or
bandwidth. I don't understand how this differs from just calling it a
sale?
What are they selling?
Is it just wording? What's the legal difference, are they not
taxed if it's called "donation"?
They should be taxed anyway.
I suspect the legal difference is that they aren't selling the content
you share.
Seth
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I've seen on some torrent trackers that offer a way to pay and
call it a donation. In exchange for donating they give you
download ratio or bandwidth. I don't understand how this differs
from just calling it a sale? Is it just wording? What's the
legal difference, are they not taxed if it's called "donation"?
I don't understand the issue. Are you talking about a qualified
nonprofit organizaiton?
My guess is no. You're talking about some guy in a basement who
has a cheap hosting company running a web site for him. He might
or might not make more than enough to pay for his hosting, and may
not have a clue about how to set up a real business or paying taxes
on it. It might, in fact, make no profit, but it's unlikely that
"Our Lady of Unlimited Free Disney Movies" is registered as a
charity.
Or exchanges among friends?
Probably exchanges between anonymous strangers. And the web site operator
would likely want that to continue, even *after* you make a donation.
Assume for the moment that both are adults, although neither knows
that about the other.
Note that a good portion of what is being "sold" is improved access
to a directory of material being distributed in violation of copyright
laws (of course, that's what ISPs do, too). However, there *are*
things legally distributed by torrents.
Or between
parents and kids? The context and the precise facts are essential to
determine what's going on, and if it is proper.
Unless it's a qualified nonprofit, any "donation" related to business
is taxable, if that's what you mean. If it is a nonprofit, and the
sale is related to its exempt purpose, it's not [income] taxable
anyway. So having it be a donation in that situation doesn't help
anything.
Probably what is being attempted is to split a two-way (taxable)
sale into two separate one-way (non-taxable) "gifts". I doubt it
succeeds if given any scrutiny. The web site operators also don't
want to appear to be selling copyrighted goods they have no right
to have.
(small) gifts in cash, merchandise, or labor between unrelated
people are non-taxable, right? No sales tax is due, and the recipient
doesn't have to pay income tax even if he has enough income otherwise
to owe it, and the giver doesn't have to pay gift tax (unless he's
been making a LOT of gifts).
For example, if I go down to the local homeless shelter or the local
mall and start handing out jackets or $20 bills or free coffee,
that's non-taxable as far as income tax is concerned, right? (Note:
I did not mention tax-deductible to the giver. It probably isn't.)
And if one of them wants to do me a favor and babysit my kids or
repair my roof, that's also a non-taxable gift, right?
Now, when one becomes contingent on the other (wink, wink), it's
no longer two non-taxable gifts, it's taxable wages or barter,
right?
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In article <ptmb045blltchvktm9jevccoc28bgc5j17@4ax.com>,
Stuart Bronstein <spamtrap@lexregia.com> wrote:
jaedendak@gmail.com wrote:
Unless it's a qualified nonprofit, any "donation" related to business
is taxable, if that's what you mean.
What if it's a hobby (that, net, costs money)?
Seth
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Wed, 16 Apr 2008 06:58:38 -0400 from mm <NOPSAMmm2005@bigfoot.com>:
I've been
to parties and dances and carnivals in the US where the admission fee
is called a donation. This were given by non-profit, maybe charitable
organizations, and I assumed they were not allowed to sell things or
lose their tax status.
Lincoln was once asked, "If you call the tail a leg, how many legs
has a dog?" His answer: "Four. Calling a tail a leg doesn't make it
one."
Similarly, calling an admission fee a donation doesn't make it one.
It's a donation if it's a suggested amount but you can still get in
without paying. If you ask them, "do I have to pay this amount to get
in?" and they say "yes", then it's not a donation.
Or at least it's not *purely* a donation. IRS regulations have
created the concept of a mixed sale and donation. For instance, when
you donate $120 to your PBS station and get a premium worth $25, your
donation is the difference, $95. (Despite the accounting nuisance,
this seems fair to me. Why should you be able to deduct a purchase of
a DVD as a charitable donation?) In the same way, if you attend a
benefit at $1000 a ticket, and the food and entertainment are worth
$125, your donation is $875 and that's all you can deduct.
--
If you e-mail me from a fake address, your fingers will drop off.
I am not a lawyer; this is not legal advice. When you read anything
legal on the net, always verify it on your own, in light of your
particular circumstances. You may also need to consult a lawyer.
Stan Brown, Oak Road Systems, Tompkins County, New York, USA
http://OakRoadSystems.com
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In article <utmb04dmi7ndbleosc2l9nhpgmrccskhfe@4ax.com>,
Paul Cassel <pcasselremove2@comremovecast.net> wrote:
jaedendak@gmail.com wrote:
They probably don't have the right to 'sell' what you are downloading.
What you are buying if I"m right, is enhanced access to stolen goods.
And that differs from paying the phone company $75 for high-speed DSL
rather than $50 for low-speed DSL how?
Seth
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gordonb.nwr0e@burditt.org (Gordon Burditt) wrote:
Probably what is being attempted is to split a two-way (taxable)
sale into two separate one-way (non-taxable) "gifts". I doubt it
succeeds if given any scrutiny.
Exactly right. In tax cases the courts use what they call the step
transaction doctrine to collapse transactions that, when viewed one
step at a time appear to be exempt, but when viewed as a whole are not.
(small) gifts in cash, merchandise, or labor between unrelated
people are non-taxable, right? No sales tax is due, and the
recipient doesn't have to pay income tax even if he has enough
income otherwise to owe it, and the giver doesn't have to pay gift
tax (unless he's been making a LOT of gifts).
Not technically exempt from sales (well, use) tax, at least in CA. It's
just hard to enforce.
Stu
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sethb@panix.com (Seth) wrote:
Stuart Bronstein <spamtrap@lexregia.com> wrote:
What if it's a hobby (that, net, costs money)?
It's still included in gross income for purposes of calculating tax.
If the costs can be documented to exceed income, then it is unlikely
that tax will actually be due. But it has to be included in the
calculation.
Stu
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| In article <ptmb045blltchvktm9jevccoc28bgc5j17@4ax.com>,
| Stuart Bronstein <spamtrap@lexregia.com> wrote:
| >jaedendak@gmail.com wrote:
| >
| >> I've seen on some torrent trackers that offer a way to pay and
| >> call it a donation. In exchange for donating they give you
| >> download ratio or bandwidth. I don't understand how this differs
| >> from just calling it a sale? Is it just wording? What's the
| >> legal difference, are they not taxed if it's called "donation"?
|| >Unless it's a qualified nonprofit, any "donation" related to business
| >is taxable, if that's what you mean.
|| What if it's a hobby (that, net, costs money)?
|| Seth
A bank robber that does not get any cash is also at a net loss. Does that
get him a get out of jail free card?
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In article <d0ge04l7f8gh4q94qsqpkc9mq0rbdo133b@4ax.com>,
Seth <sethb@panix.com> wrote:
In article <ptmb045blltchvktm9jevccoc28bgc5j17@4ax.com>,
Stuart Bronstein <spamtrap@lexregia.com> wrote:
What if it's a hobby (that, net, costs money)?
"Hobby" expenses are not offsetable against income from the hobby, and
especially *NOT* offsetable against other income. Lots of tax case law on
this, especially with regard to raising race-horses. To be considered a
'business' operation one has to be in the black 2 years out of the last 5.
The _first_ BBS -- 'CBBS', operated by Randy Seuss and Ward Christiansen --
had running battles with the phone company every time they requested additional
_RESIDENTIAL_ phone lines. The telco took the (not entirely unreasonable)
position that 20+ (30+) phone lines was -not- reasonable for a single
residence, and was demanding that they install 'business' lines. Randy
claimed it was just a 'hobby', and he didn't "make money" from it, and that
business lines were not required. The matter went to the State "Public
Utilities Commission" commission at least twice, and the FCC may even have
been involved. He _did_ prevail with the phone company -- in part because he
offered 'free' service to _anyone_; although he did provide greater access
(more hours/month, etc.) to those who 'donated' to help defray the costs of
operating the system.
As an aside, this type of approach makes cost-accounting *really* interesting.
If you can get 5 hrs/week for no charge, what is the 'value' of getting
25 hrs/week? Realizing that 5 different people can get a total of 25
hrs/week for no charge, how do you claim that _those_ 25 hrs are worth less
than the 25 hrs used by the single person? Maybe he's really selling
Orwellian pigs?? <grin>
IF there is a cost/value to the extra access, then there is the question
of what the base is for allocating the cost -- the -maximum- hours of
access allowed, or the actual hours used -- before or after subtracting
off the hours available to those who do not 'donate'.
This stuff can keep the tax accountants, _and_ the lawyers, occupied long
enough to *ensure* that you don't have a profit 'on the record'. <*GRIN*>
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Seth wrote:
They probably don't have the right to 'sell' what you are downloading.
What you are buying if I"m right, is enhanced access to stolen goods.
And that differs from paying the phone company $75 for high-speed DSL
rather than $50 for low-speed DSL how?
The phone company is a carrier. The OP refers to a hosting service. Huge
difference.
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On Apr 19, 4:45 am, Paul Cassel <pcasselremo...@comremovecast.net>
wrote:
The phone company is a carrier. The OP refers to a hosting service. Huge
difference.
Perhaps there is a difference, but it is not huge. The culpability of
a hosting service for message content still has not be fully resolved
in the courts. And the phone companies, while still wearing the
common carrier cloak, are much more. Voice mail and speed call lists
are but a few of the items that are stored content on a server. The
distinction between the two is a blurred line at best.
--Larry
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On 2008-04-15 04:58:07 -0700, jaedendak@gmail.com said:
I've seen on some torrent trackers that offer a way to pay and call it
a donation. In exchange for donating they give you download ratio or
bandwidth. I don't understand how this differs from just calling it a
sale? Is it just wording? What's the legal difference, are they not
taxed if it's called "donation"?
The term "donation" has another connotation in the area where I live.
It is used by prostitutes to refer to the money they recieve from
clients. The idea is that, if money is not charged for sexual services,
they are within the law and cannot be harassed by the police. So lots
of generous "donations" are made in the business. I don't know of any
court cases, but I suspect this usage of words may not really provide
the protection from arrest that is expected if and when the police
decide to get serious about laying charges instead of looking the other
way.
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On Apr 21, 7:14 am, Don <dwz...@telus.net> wrote:
On 2008-04-15 04:58:07 -0700, jaeden...@gmail.com said:
The term "donation" has another connotation in the area where I live.
It is used by prostitutes to refer to the money they recieve from
clients. The idea is that, if money is not charged for sexual services,
they are within the law and cannot be harassed by the police. So lots
of generous "donations" are made in the business.
Both the hookers and the torrent servers are operating outside the
law... and the fact they thery CALL their payments "donations" or
"gifts" doesn't mean they're really donations or gifts rather than
payments. (Hookers prefer the word "gift.")
Prostitutes of course have all sorts of euphemisms (e.g., you "play"
with them on "dates") and they also have various strategies for
protecting themselves from legal problems. For example, you give them
the gift (or perhaps a "tip" if it's a dancer) at the beginning of the
"date." Before the fate, call girls and/or their handlers will check
your ID and your credit... and one reason for this is to check to see
if you are a cop. They also make you swear you're not a cop. To get
back to the gift, there is usually a disclaimer that it's just a gift
and any sex which coincidentally happens is just spontaneous sex
between consenting adults and not a service being provided for a fee.
None of this totally protects the prostitutes from prosecution, of
course--- but I suppose it does make it a little harder to bust them.
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The term "donation" has another connotation in the area where I live.
It is used by prostitutes to refer to the money they recieve from
clients. The idea is that, if money is not charged for sexual services,
they are within the law and cannot be harassed by the police. So lots
If they *require* a donation before they'll have sex with me, it's
still prostitution. If they don't, they may find that the "shareware
sexual services" business has a lot of freeloaders (including cops).
of generous "donations" are made in the business. I don't know of any
court cases, but I suspect this usage of words may not really provide
the protection from arrest that is expected if and when the police
decide to get serious about laying charges instead of looking the other
way.
It might be that the donations are really optional for cops.
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Don <dwzimm@telus.net> wrote:
The term "donation" has another connotation in the area where I
live. It is used by prostitutes to refer to the money they recieve
from clients. The idea is that, if money is not charged for sexual
services, they are within the law and cannot be harassed by the
police. So lots of generous "donations" are made in the business.
I don't know of any court cases, but I suspect this usage of words
may not really provide the protection from arrest that is expected
if and when the police decide to get serious about laying charges
instead of looking the other way.
Assuming the customer has no actual duty to pay, it sounds to me
similar to tipping a waiter in a restaurant. In the tax context at
least tips have been determined to be in exchange for services and not
a gift. If the same reasoning applies with respect to prostitutes,
their donations won't help them.
Stu
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In article <jomj04dvf1jml1uanf2dkhu4of9vn2cmfa@4ax.com>,
Paul Cassel <pcasselremove2@comremovecast.net> wrote:
Seth wrote:
They probably don't have the right to 'sell' what you are downloading.
What you are buying if I"m right, is enhanced access to stolen goods.
The phone company is a carrier. The OP refers to a hosting service. Huge
difference.
Except the OP referred to a _directory_ service, which doesn't
actually host anything itself. (Suppose Google charged extra for
enhanced access to search results; if some of the stuff searched for
was illegal, would that make Google responsible for selling it?)
Seth
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In article <d24h04thbbcalnsfp94l8vjlj8tdbdvsar@4ax.com>,
NotMe <me@privacy.net> wrote:
| What if it's a hobby (that, net, costs money)?
A bank robber that does not get any cash is also at a net loss. Does that
get him a get out of jail free card?
It means he doesn't have to pay any income tax on his robbery income,
doesn't it?
Seth
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bonomi@host122.r-bonomi.com (Robert Bonomi) writes:
"Hobby" expenses are not offsetable against income from the hobby, and
especially *NOT* offsetable against other income. Lots of tax case law on
this, especially with regard to raising race-horses. To be considered a
'business' operation one has to be in the black 2 years out of the last 5.
No, you don't. The "profitable three out of five years" rule merely
establishes a presumption in favor of it being a business. It's
not an absolute safe harbor. You can lose money every year and still
be considered a business by the IRS if your operation has enough of the
indicia of being a business. Likewise, you could be profitable every
year and the IRS could still classify your operation as a hobby if
it wasn't run in a businesslike enough fashion.
--
Rich Carreiro rlc-news@rlcarr.com
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On Tue, 22 Apr 2008 06:56:31 -0400 in misc.legal.moderated,
sethb@panix.com (Seth) wrote,
Except the OP referred to a _directory_ service, which doesn't
actually host anything itself. (Suppose Google charged extra for
enhanced access to search results; if some of the stuff searched for
was illegal, would that make Google responsible for selling it?)
Suppose the page you were looking for had been removed _because_ it
was illegal, and Google offered to show you a cached copy of it?
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In article <ing314dn962e0a112cfchdl4kv5rn5bl5m@4ax.com>,
David Harmon <bad@example.invalid> wrote:
On Tue, 22 Apr 2008 06:56:31 -0400 in misc.legal.moderated,
sethb@panix.com (Seth) wrote,
Suppose the page you were looking for had been removed _because_ it
was illegal, and Google offered to show you a cached copy of it?
Would it show the same page (perhaps more slowly) to someone who
didn't pay for enhanced service?
Seth
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