On Mon, Sep 28, 2009 at 3:05 PM, Dewald Pretorius <dpr...@gmail.com> wrote:
> > The other thing that really bugs is me the payment of the 70% in the > form of a gift or donation. I cannot show that in the Sales Revenue of > my business. If the amount becomes substantial, how do I explain to > the tax man why my for-profit incorporated company is getting all > these gifts and donations? And how do I do the accounting for my > product units that were sold, but did not generate any top-line > revenue? Not sure how it works in other countries, but in the U.S. revenue is revenue is revenue; most gifts are income to the person who receives them. Even if you are a non-profit, if you're making a profit from a substantial part of your operations, you can end up owing taxes on it, even if you call the income a gift. Otherwise, everybody would call everything a gift and nobody would pay taxes! The fundamental rule is that when the "gift" is actually in exchange for something of value, it is income to the receiver and not deductible as a donation to the giver. Nick
