I'm Just Sayin'

You know, I'm never going to be able to afford that A900 I want if I can't get a few more people to hit the black box. (The black box in the right-hand column, that would be.) If you haven't, would you at least consider it? You can choose from one of four levels, from 25¢ a month to $6. Most people choose $1 or $2. I mean, what would you pay for a magazine subscription? That's what you would pay for a magazine that comes once a month, or even once every two months. Isn't this better? I work weekends, after all. Think of T.O.P. like a magazine that comes in little daily increments.

I want you to fully understand where I'm coming from here. Last April 14th, I called the nice man at the IRS, because I didn't know if I had to pay taxes on what I was calling "subscription donations." I described the situation as honestly and forthrightly as I could. He said, "that's not a donation." He described to me (in, um, great detail) what "donation" means in the eyes of the IRS and what I had to do to qualify as a charitable entity, blah blah blah. Then he said, "Is there incentive for them signing up, or is it totally voluntary?" No, I said, it's totally voluntary. "Do they get anything extra for the contribution?" Exactly nothing extra.

There was a long silence. "Then, technically, those are gifts."

Are you, um, getting the significance there? (It took a while for it to dawn on me.) You don't have to pay income tax on gifts.

Can you understand better now why I'm, er, eager to get you to pitch a buck or two a month into the hat?

By the way, if you're some sort of tax ninja and you don't agree with the nice man, don't tell me. Seriously, don't. I won't hear you, because I will have my fingers in my ears and be blabbering "SONYA900SONYA900SONYA900SONYA900!!!" real loud.

Please, subscribe!! Do it today. If you do, or if you already have, thank you.

Okay, PBS mode off. And, thanks for your support.

—Mike, TOP head bureaucrat and weekend-working plongeur

Comments

[Andy Johnson]

I figure that my 37th Frame 'donation' has been used up now, so if you add an annual option I'll sign up!

Andy

[Manish]

I have still not recovered from your office redecoration fiasco.

[Ove]

I have been reading your blog for some months now and have not dared to make a comment earlier. In this case it's easy though, since I just wanted to say your blog is well worth a small contribution. I found my way here by your columns in the UK magazine Black & White Photography, and I really enjoy both your view on things and your writing. And the articles per se, of course. :) Thanks!

[Puplet]

I'm assuming that your Sony A900 will end up being a tax-deductable A900 though?

[Jim Kofron]

Mike,

Thanks for the gentle reminder...

Jim

[Michel]

thanks for the reminder Mike. I had meant to do it when you first launched the concept, but somehow "why do today what you can put off till tomorrow" won out.

Love the blog/website/ezine...

Michel

[Eolake Stobblehouse]

"You don't have to pay income tax on gifts."

Rock on, dude! Good for you. This makes me even happier that I went for the highest level of this gift-thingy.

[Andrew Kelley]

I've already made a donation. Learning that you won't have to pay tax on the donation makes it all the sweeter.

[Miserere]

Well Mike, when you set this thing up I thought you were going to use the funds to feed Zander, and I said to myself I ain't gonna help feed no stinkin' kid with crazy chucks. But as you seem to be indicating that you'll use the proceeds of these gifts to buy yourself a toy, I mean, an A900, then I cannot refuse your request.

I just signed up.

I wish I could have done so at the highest level, but there is only one income in my household of two and it's scheduled to run out on August 31st. I hope you understand.

I'm sure you'll let us know as soon as we reach the A900 level. Maybe you could have a thermometer on the sidebar like at charity runs.

[Cliff]

I subscribed at the 6 month level, but would have gladly done a 12 month subscription instead. Best of luck on securing that A900, I want one as well. Sonystyle.com currently has 24 month same as cash financing if that helps.

[Roger Bradbury]

Sonya900.... Sonya900?! Any relation to Hal?
If you try to open the battery door does it say, "I'm sorry Mike, I'm afraid I can't do that" and does it sing 'Daisy' if you remove the memory card?
No wonder modern DSLRs are nearly all large black monolithic objects that do mysterious things.
In case you're wondering, yes, I'm an aging Sci Fi geek.

[Tom]

The local IRS office in my home town had a sign that read "Seizure Fever: Catch it!"

Just sayin.

[Mark]

In your post you say that you don't need to pay income taxes on gifts, "Well, up to $11,000 a year, anyway". My understanding is that gifts of any amount are always tax-free to the recipient. Gifts of over $12,000 from a single giver trigger the gift tax, but for the *giver*, not the recipient.

Did you get told otherwise?

[Kalli]

Since this is by far my favourite source for punditry I'll hereby pledge that I'll hit the black box when I get a job.

Your D700 piece, and pretty much all the T.O.P. Ten Cameras entries, display perfectly why I always come back for more.

[Mike Johnston]

"In case you're wondering, yes, I'm an aging Sci Fi geek."

Roger,
As I'm sure you realize, you have a perfect last name for one.

Mike

[Bryce Lee, in Burlington, Ontario, Canada]

At one point or another in time there was something that has "ized" at the end to indicate a special application had been
applied to the product, ie tenderized...

May I suggest my last large figure donation then has been Zanderized???

Being a foreigner, I can't purchase the goods
advertised on the B&H website; most of the goods don't qualify for full Canadian warranty. And of course the monetary exchange rate combined with our
very high duty and tax system means nine times out often it is far easier to purchase the product here in Canada. Then too so many things available in the USA are simply not available in Canada.

Oh I agree with your thoughts about the Nikon D700 however the darn thing sells here for
about C$3500.00 plus 13 percent sales taxes.
The D700 is quite likely the closest thing to an F100 in any way shape or form.

And for what? For the joy of knowning the extra costs including monetary exchange will give me a two year warranty versus a one year warranty and to have an extra instruction book printed in the language of the Republic of Quebec.

My lack of digital photography
renders a cheap 8 meg Canon Point and Shoot entirely adequate for my digital photographic needs.

[Mike Johnston]

"Did you get told otherwise?"

No, just read it somewhere, 'round about Tax Day. All the better....

I think I'll change the post. Thanks to everybody who has pointed this out to me.

Mike

[william]

the honorable thing to do with blog donations (and i use the term loosely, as the IRS agent caught you doing) is to spend them on hosting/direct maintenance of the site, and not luxury items.

i'm just sayin'

[Alex Ibasco]

Reading your blog has become part of my daily habit...

Thank you for that and subscription done!

Alex

[dwross]

Done. (Now I just have to remember to fill out my NPR pledge card!)

[John Camp]

I will send you a check for $100 if you will use the money to get a Post Office box to collect checks from other people who don't want to sign up with Pay Pal. I would have sent you money before this, but I am NOT going to sign up with Pay Pal.

JC

[Christopher Lane]

Okay, I finally figured out how to subscribe. Now please get the !@#$@& Sony a900.

[ctein]

Dear Mike and others,

The gift tax doesn't work the way you think it does. It's actually better than that.

I have some passing familiarity with gift taxes, because Paula gets regular gifts from her parents, and I have a girlfriend who used to be an IRS auditor (and no, that did not get me any "special benefits" [grin], just lots of good advice).

Anyway, here's the situation. In 2009, up to $13,000 in a gift does not have to even be reported by the giver (although if you think there's a chance the IRS might think it was income for the recipient, it never hurts to file the gift tax form).

If you give someone more than $13,000, you have to report that on the IRS' gift tax form, but YOU DO NOT OWE ANY GIFT TAX UNLESS YOUR LIFETIME CONTRIBUTIONS TOTAL MORE THAN $1,000,000!

Most people don't understand that. They think that having to report the gift automatically means there is a tax liability. It does not. There is a unified tax credit (currently about $345,000) that you, the donor, have that you apply against the gift tax you theoretically owe. Until you have used up that entire credit, no taxes need to be paid on a gift by either you or the recipient.

So, those of you who were considering sending Mike $25,000 checks but decided to hold off because of the tax liabilities, put those checks in the mail today! All you'll have to do is fill out a fairly simple form reporting the gift next April 15. You won't owe any money; Mike won't owe any money.

So, no more excuses; keep those cards and letters coming in.

~ pax \ Ctein
[ Please excuse any word-salad. MacSpeech in training! ]
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-- Ctein's Online Gallery http://ctein.com 
-- Digital Restorations http://photo-repair.com 
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[Felix]

It would be useful to allow one off donations as well, for those of us who buy magazines at the news stand and can't handle commitment. I assume this wouldn't be too difficult to add as a payment option?

[Mike Johnston]

"the honorable thing to do with blog donations (and i use the term loosely, as the IRS agent caught you doing) is to spend them on hosting/direct maintenance of the site, and not luxury items."

William,
Actually I'm in the process of doing that. The blog will soon be "optimized" by the experts at TypePad, and I have hired a top advertising graphics firm to come up with a new logo (seriously).

Stay tuned.

Mike

[Steve Rosenblum]

"Actually I'm in the process of doing that. The blog will soon be "optimized" by the experts at TypePad, and I have hired a top advertising graphics firm to come up with a new logo (seriously)."

Actually, I think the site is already "optimized' and does a superb job of offering me what I want out of it. We have a saying in the field of medicine that applies to those performing procedures "the enemy of good is 'better"--many a patient has had a perfectly good result from a medical procedure ruined when the doctor could not supress the urge to "just make it a little better"--leading to a serious complication.

I'm not saying you should become complacent about your site and never do anything to improve it. But sometimes being relatively understated can be a lovely thing....

[Luca Baldassarre]

T.O.P. has become my most valuable resource for photography related news, comments and debates, plus the books recommendations that I diligently follow. So it was time to give that "most valuable" some values.
Thank you for your work and keep it coming!

Luca

[Stuart Frentz]

I'm a fulltime tax attorney and part-time photographer. I know you don't want to hear this, but you need to hear it for your own good. This website is too public to get away with spreading bad tax advice. Not only might you get in financial trouble, but so might other innocent people who read your blog and think that they don't have to include such "contributions" in their taxable income.
Subscription payments are not gifts. They are not made solely out of disinterested generosity. Subscribers make subscription payments in response to your solicitations with an expectation that their support will help you continue to maintain this site and provide subscribers with content, which presumably they enjoy, similar to a photography magazine. The site is clearly a business. You have commercial arrangements with B&H and other vendors from which you derive income. Subscription payments are just as much taxable income as payments you receive from vendors. You regularly solicit subscription payments from readers; this very post is a solicitation for payments. Your solicitations suggest that subscription payments will help fund the site. The fact that subscribers do not receive anything specific in return for their payments, and that they could "freeload" without paying and receive the same content, doesn't mean that these payments are purely gratuitous. They are made in a business context. See Commissioner v. Duberstein, 363 U.S. 278 (Sup. Ct. 1960). In that case, the U.S. Supreme Court upheld a lower court's finding that a Cadillac car given to Duberstein by Berman because Duberstein had been helpful in suggesting customers for Berman's automobile dealership was compensation, not a gift. There was no prior arrangement for compensation and Duberstein had no expectation of being paid. The Court stated that "a voluntary executed transfer of property by one to another, without any consideration or compensation therefor, ... is not necessarily a 'gift' within the meaning of the [tax] statute." The mere absence of a legal or moral obligation to make a payment does not establish that it is a gift. The donor's "intention" in making a payment is not determinative of whether the payment is a gift.
Unfortunately, you cannot rely on a telephone conversation with an IRS Agent. The government is not bound by what one of its agents says during a casual telephone call. I'm one of many who enjoy this site very much and I would hate to see you, or any of your readers or subscribers, get in trouble over this issue. I'm not your lawyer or theirs, and you should get your own counsel on whether subscription payments are gifts or taxable income.

IRS Circular 230 Notice: Any U.S. federal tax advice contained in this communication was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding U.S. federal tax penalties or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

[Mike Johnston]

Well, there goes plausible deniability.

Mike