Donations vs Sales

[icor1031]

What is the name of your state (only U.S. law)? SD

A friend hosts a game server, and he has a website where users can choose a package for a set price and receive it, if they donate to his server.
In return, that package gives them special benefits in his game server: such as access to new weapons.


Legally, would this be considered a donation, or could he word it in such a way that it is counted as a donation and not as a sale, so that he is not under obligations that would normally apply to a sale?

Thank you.

 

[sandyclaus]

A friend hosts a game server, and he has a website where users can choose a package for a set price and receive it, if they donate to his server.
In return, that package gives them special benefits in his game server: such as access to new weapons.


Legally, would this be considered a donation, or could he word it in such a way that it is counted as a donation and not as a sale, so that he is not under obligations that would normally apply to a sale?

Thank you.

It's not a donation if they have to pay for something else that the donation wouldn't otherwise earn them.

In your scenario, the only thing they are getting for their "donation" is special pricing - a perceived discount, if you will - on a web-hosting package. It's still a sale, and legally should be treated as such.

What's the end goal here? Are they trying to gain non-profit status for donations they receive?

 

[icor1031]

What's the end goal here? Are they trying to gain non-profit status for donations they receive?

The goal is to remove liability/obligation. For one example: If the server Breaks in the future and he's not able to keep it running, does he have to give refunds?

However, as I think about it: there probably aren't that many obligations even if it's considered a sale..
I suppose a disclaimer stating a refund will be issued if unable to fulfill would suffice for most problems, and that the benefits can change or be taken away (such as if you're banned from the server for bad conduct) - as many major games do..

If I have any thing wrong here, please tell me. I am curious because I'm considering running a game server for the money, as well.

Thanks!

 

[Ohiogal]

The goal is to remove liability/obligation. For one example: If the server Breaks in the future and he's not able to keep it running, does he have to give refunds?

However, as I think about it: there probably aren't that many obligations even if it's considered a sale..
I suppose a disclaimer stating a refund will be issued if unable to fulfill would suffice for most problems, and that the benefits can change or be taken away (such as if you're banned from the server for bad conduct) - as many major games do..

If I have any thing wrong here, please tell me. I am curious because I'm considering running a game server for the money, as well.

Thanks!

So your buddy is going to pay sales tax on everything correct?

 

[icor1031]

So your buddy is going to pay sales tax on everything correct?

I don't know what he does. As I said, I'm thinking about doing this myself.
And yes, I'd pay sales tax. Per the first response, it seems that would be required.

 

[Zigner]

If you'd like, make it clear that no refunds will be issued in any case and that ANY warranties, express or implied, are fully waived by the customer. Of course, have this reviewed by a local attorney.

 

[TheGeekess]

A friend hosts a game server, and he has a website where users can choose a package for a set price and receive it, if they donate to his server.
In return, that package gives them special benefits in his game server: such as access to new weapons.


Legally, would this be considered a donation, or could he word it in such a way that it is counted as a donation and not as a sale, so that he is not under obligations that would normally apply to a sale?

Thank you.

Why not sell Memberships? Free membership/Paid membership.

 

[icor1031]

Thanks, all of you.

Why not sell Memberships? Free membership/Paid membership.

I thought about it, I might.

 

[Houston11]

I think it's not a donation, if you not clear about refund then in short we can say that it's trick to increase your sale,If you'd like, make it clear that no refunds will be issued in any case and that ANY warranties, express or implied, are fully waived by the customer. Of course, have this reviewed by a local attorney. Thanks for sharing

 

[quincy]

If you'd like, make it clear that no refunds will be issued in any case and that ANY warranties, express or implied, are fully waived by the customer. Of course, have this reviewed by a local attorney.

Hey, Zigner! Houston11 liked your words so much, he decided to repeat them verbatim.

Of course, he had to revive a two-and-a-half month old thread to do so but, at least by using your words and not his own, he sounds smarter than he probably is.