What is the difference between Donations and Sales? (U.S.A.)

[LRRoberts0122]

What is the difference between Donations and Sales?

If someone provides a cash donation, is it legal to give them a donation gift, or "perk" as thanks? Can you offer donation packages with varying perks?

Where is the line? I want to offer my contributors virtual items and badges as thanks for their support. Can I do this without it becoming a digital sale?

Where exactly is the answer specified in US Law?

 

[FlyingRon]

It depends why you are asking. If you are a 501(c) (or other tax exempt) organization, the value of your "gift" needs to be subtracted from the taxable deduction they take for your donation. If you're talking about some other rule such as sales tax or restrictions on selling things or the like, you're going to have to tell us WHAT STATE YOU ARE IN and what exactly you are concerned about. Chances are whether you call it a donation or a sale, it's INCOME to you.

 

[tranquility]

Flyingron is generally correct. Here, I would add that any exchange for something else can be treated as a sale even if you are a 501(c)(3) organization. The key as to if it is taxable depends on the state sales tax laws for one type of taxation and on the concept of Unrelated Business Income (UBI) for another. UBI will tend to do with if your exchange is of the nature of a trade or business and is regularly carried on and is unrelated to your charitable purpose. (Or, the purpose of your exemption.)

 

[samanthakerry]

The basic difference is that when you sell states you are exchanging them for something. This could be credits or cash. When you are donating states you are only giving them, in return for nothing at all.

 

[single317dad]

The basic difference is that when you sell states you are exchanging them for something. This could be credits or cash. When you are donating states you are only giving them, in return for nothing at all.

https://www.youtube.com/watch?v=wKjxFJfcrcA

 

[quincy]

The basic difference is that when you sell states you are exchanging them for something. ...

This is very true, samanthakerry. I think, in fact, that when Russian sold Alaska, they exchanged it for 7.2 million U.S. dollars.