10-08-2010, 10:52 AM
I agree with Lakextackle........I wouldn't be over concerned about this issue!
In order for a business to deduct an expense, by code, it has to be "ordinary and necessary". Giving samples of items from inventory or cash to promote your business arguably meets this test.
I really wouldn't worry about the IRS's position on this issue. I can’t image a revenue agent pursing taxes from the recipients of these items of goods or cash unless the activity was fraudulent. I recall seeing a story of a woman who defrauded people of “donations” she collected claiming she had cancer when she did not. I know the state got involved but I have never heard of the IRS looking for taxes on her deception (even thought they could).
I would focus on compiling with the state registration requirements (if needed) and move on!
If any of those involved with the event prefer discussing this over the phone, feel free to PM me your number and we can discuss further if needed.
Rick
[signature]
In order for a business to deduct an expense, by code, it has to be "ordinary and necessary". Giving samples of items from inventory or cash to promote your business arguably meets this test.
I really wouldn't worry about the IRS's position on this issue. I can’t image a revenue agent pursing taxes from the recipients of these items of goods or cash unless the activity was fraudulent. I recall seeing a story of a woman who defrauded people of “donations” she collected claiming she had cancer when she did not. I know the state got involved but I have never heard of the IRS looking for taxes on her deception (even thought they could).
I would focus on compiling with the state registration requirements (if needed) and move on!
If any of those involved with the event prefer discussing this over the phone, feel free to PM me your number and we can discuss further if needed.
Rick
[signature]