Ca. Tax Lawyer 2018, Volume 27, No. 1

Non-Taxable Crowdfunding—Amending Reporting Requirements to Reflect Social Changes1

By Michelle B. Graham, Catherine M. Swafford & Kelina M. Smith2


A. The Emergence of Crowdfunding

Around 2010, during the recession and government bailouts of corporate banks and automakers, a type of social-civic "bailout" by private citizens emerged known as "crowdfunding." According to the website YouCaring, crowdfunding is defined as "the practice of funding a project or cause by raising money from a large number of people, typically through the Internet. It is a form of peer-to-peer fundraising that harnesses the power of social networks to raise awareness and draw donations from around the world for online campaigns."3 Similarly, Wikipedia defines crowdfunding as "the practice of funding a project or venture by raising monetary contributions from a large number of people."4

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