Business Matters: Are Kickstarter Pledges Taxable Income?
Business Matters: Are Kickstarter Pledges Taxable Income?

Are Kickstarters Engaging In Off-Shore Accounting Practices
-- Is Kickstarter money taxable? The site allows fans to fund a wide range of creative projects - books, movies, videos, albums, tours - in return for a reward based on the level of the pledge. Artists collect revenue in the form of pledges. In return, the artists owe their funders a predetermined good or service (or bundle of goods and services).

Kickstarter rewards are different from traditional retail transactions, Not everything at Kickstarter has a set price, and there is a time window between receiving a pledge and delivering the goods and services. It doesn't look or feel like a store.

The Internal Revenue Service probably isn't going to worry about those details. The US Internal Revenue Code defines taxable income as "income from whatever source derived" and allows for many exemptions (such as certain gifts and interest in municipal bonds) and deductions (mortgage interest and charitable giving, for example). And while some people may not see a Kickstarter campaign as revenue in the traditional sense, they shouldn't forget the all-encompassing term "from whatever source derived."

Attorney Chris Castle explains that Kickstarter money doesn't appear to be tax-exempt unless the party receiving the money has obtained not-for-profit status. Kickstarter uses the word "reward" to describe what its artists give fans who fund their projects. Castle advises artists to ask their tax advisors whether "rewards" are subject to state or local taxes ("reward" starts to look like "price," he explains) and explains that the nature of the artist-and-fan exchange probably results in a tax obligation.

"I think the Kickstarter relationship between artist and funder could be fairly described as a contract-the Kickstarter 'deal' is a promise to do something if certain conditions are met. This is most likely going to be viewed as a 'unilateral contract' and not as a gift. It's also not like 'panhandling' in that there seems to be a future promise to perform under a unilateral contract. So the payor says if I give you X then you will do Y. The payor also gets some 'rewards' bling in most instances (which appears to be a fairly well defined fair market value (aka a price) based on the contribution level required to get the 'rewards' bling). That looks taxable to me, although I'm not a tax expert."

But as Kickstarter explains at its FAQ page, pledges that go to a 501(c)(3) organization may be tax deductible. The organization needs to be sure its Amazon Payments account is set up by the 501(c)(3).
( Semaphore Music)

SliceThePie Partners with PledgeMusic
-- PledgeMusic, a UK-based funding site similar to Kickstarter, has partnered with SliceThePie to manage the financing process for SliceThePie artists. "This means, Slicethepie artists will have the support of the PledgeMusic marketing team, their widgets, expertise and the chance to raise some cash for charities in the process," SliceThePie explained in an email sent Monday.

SliceThePie was created as a way for artists to raise money from fans for their projects, giving them a financing platform that's different than the traditional record label system. Since then the company has launched sister site SoundOut that allows artists to pay for feedback from music fans around the world. SoundOut announced a $2 million fundraising round in July.


Red Hot Chili Peppers Album Mastered Specifically for iTunes

-- Is this a continuation of the loudness wars? The upcoming Red Hot Chili Peppers album, "I'm With You," has been mastered specifically for iTunes, according to the album's iTunes page. The 14-track album will be released August 30.

The Computer Audiophile blog calls Rubin, mastering engineer Vladimir Meller and the Red Hot Chili Peppers the "compression kings" and notes that they have a "history of sonic destruction." Meller was mastering engineer on Rubin-produced albums "Californiacation" by the Red Hot Chili Peppers and "De-Loused in the Comatorium" by Mars Volta. "He defaults to 'stun'," one mastering engineer said in the book "Perfecting Sound Forever." Rubin - but not Meller - was on board for Metallica's "Death Magnetic," an album whose compressed dynamic range became well known after a different version was featured in the Guitar Hero version of the album.
(Computer Audiophile)


iTunes Xtreme Makeover

-- iTunes is going to get a "complete facelift" for iTunes 11, according to a report at the iDownloadBlog. That means a "much more clean and 'slick'" users interface and greater integration with iCloud. "Rather than the iTunes Store being essentially a web browser, the Store will actually be integrated into the entire app- much like Spotify is currently," it states.
( iDownloadBlog)

Questions? Comments? Let us know: @billboardbiz

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