Crowdfunding

Understand the nuances of crowdfunding and its implications for fundraising, investing, and tax reporting. This guide explores various types of crowdfunding—rewards-based, equity, debt-based, and more—providing insights into the responsibilities of project initiators and the potential risks and benefits for backers. Learn about the tax issues related to crowdfunding, including income reporting, gift tax considerations, and the use of Form 1099-K.

Highlights:

• Types of Crowdfunding: Overview of rewards-based, equity, debt-based, donation-based, and digital security crowdfunding.

• Backer Considerations: Key points on backer involvement, potential rewards, and risks.

• Tax Reporting: Guidance on when crowdfunding proceeds are considered taxable income, gift tax issues, and the reporting of capital gains or losses.

• Compliance Tips: Recommendations for project initiators on selecting platforms, maintaining records, and ensuring compliance with financial regulations.