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Internet’s Favorite Bus Monitor to Get Her $600K+ Tax-Free

document Crowdfunding

Internet’s Favorite Bus Monitor to Get Her $600K+ Tax-Free
by Alex Fitzpatrick

Karen Klein, the 68-year-old bus monitor who was verbally abused by a group of 12-to-15-year-old students, has received more than $600,000 for a well-earned vacation from Internet users as of Saturday afternoon. But will she — or her nearly 30,000 funders on IndieGoGo — be held liable for any taxes on that windfall of online love? Thankfully for both parties, not at all. Some Mashable readers (and writers) have been debating whether or not that money would be classified as income, and therefore taxable. We turned to tax lawyer Joanne Clark, Esq., for an expert‟s analysis.

“As a general rule, there are no income tax implications to the recipient/donee of a cash gift,” wrote Clark in an e-mail. “If she invests that cash, she would be responsible for income taxes on any income derived from it.” That makes sense — if Clark invested the funds and made a profit, she‟d be taxed for her capital gains. But what about the donors? They‟re off the hook as well, as long as no individual donor gave Clark more than $13,000. They can‟t, however, claim their donation as a tax write-off. “The gift tax implications are more relevant on the donor side,” said Clark. “If individual donations don‟t exceed $13,000, there are no issues for the donors. If a single donation exceeds $13,000, the donor is supposed to file a gift tax return. I am guessing that most donations are on the small side. And it isn‟t clear, but I assume that there is no „charitable purpose‟ behind these donations for IRS purposes, so there‟s no tax deductions for donors.” For further clarification, Mashable called up Slava Rubin, CEO and founder of IndieGoGo. Slava was careful to say that he couldn‟t legally give tax advice because he‟s not a registered accountant. However, he was able to tell us that the Karen Klein campaign “is not an official nonprofit,” so indeed the donors wouldn‟t be able to write-off their donation. Why do you think so many people have donated to Klein? Share your thoughts in the comments.

Summary
Karen Klein, the 68-year-old bus monitor who was verbally abused by a group of 12-to-15-year-old students, has received more than $600,000 for a well-earned vacation from Internet users as of Saturday afternoon.

Description
“The gift tax implications are more relevant on the donor side,” said Clark. “If individual donations don’t exceed $13,000, there are no issues for the donors. If a single donation exceeds $13,000, the donor is supposed to file a gift tax return. I am guessing that most donations are on the small side. And it isn’t clear, but I assume that there is no ‘charitable purpose’ behind these donations for IRS purposes, so there’s no tax deductions for donors.”

Tags: Crowdfunding, Crowdsource, Crowdsourced, Crowdsourcing, IndieGoGO, Karen Huff Klein

Posted by Luis Enrique Morales

Jun 25, 2012 12:06 am GMT Viewed 727 times

Author: Alex Fitzpatrick Source

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Internet’s Favorite Bus Monitor to Get Her $600K+ Tax-Free

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Internet’s Favorite Bus Monitor to Get Her $600K+ Tax-Free

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