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CBS/Paramount sues to stop Axanar

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Is crowdfunding taxable? I'm so glad you asked that.
http://www.journalofaccountancy.com/issues/2015/oct/crowdfunding-and-income-taxes.html

Here's the TL;DR.
Amounts received through reward-based crowdfunding campaigns most likely are taxable income under Sec. 61, to be reported by the creator in the year of receipt. While not determinative of federal income tax, Washington state guidance indicates crowdfunding income may be subject to state excise, sales, and/or business and occupation tax ... If, by analogy, tax practitioners conclude that a client's crowdfunding income is includible in U.S. federal gross income, a number of other questions and issues arise, including what expenses, if any, should be deductible against it. That depends on several factors, including: Whether the crowdfunding activity is deemed a trade or business or a hobby; Whether the activity is deemed a startup business; The method of accounting used by the creator; and The value of rewards given to backers.

...
If the activity is deemed a trade or business, all otherwise allowable trade or business expenses should be deductible against the income (Sec. 62). If, however, the activity is deemed to be a hobby, only expenses to the extent of the income will be deductible (Sec. 183).

...

If the crowdfunding activity is a new business, creators may have startup costs or, in the case of an activity set up as a corporation or partnership, organizational costs.

A taxpayer must capitalize these costs unless the taxpayer makes an election under Sec. 195 for startup costs or Sec. 248 (corporations) or Sec. 709 (partnerships) for organizational costs to deduct up to $5,000 of these costs (reduced by the amount by which they exceed $50,000). The deduction is taken in the year the trade or business becomes active (for startup costs) or the partnership or corporation begins business (for organizational expenses), and the remainder of the startup costs are amortized over a 15-year period beginning in the month in which the trade or business becomes active or the corporation or partnership begins business. A taxpayer is deemed to make the election to deduct and amortize these expenses unless it affirmatively elects to capitalize them on the return in which the trade or business activity begins or the entity begins business.

...

Some of the rewards offered on the crowdfunding campaigns, however, might be difficult to value. For example, a Kickstarter project that developed a "playhouse" for cats offered not only a set of blocks to build the structure but, at lesser levels of funding, a picture of cats with the backer's name and lifetime entry to the creator's office in Amsterdam to "cuddle" with cats there.

If the value of any of the rewards offered cannot be determined, or if a reward is determined to have no value or a value less than the pledge amount, additional evaluation may be required to determine whether all or part of the contribution can be classified as a nontaxable gift or some other type of contribution.
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There's more, of course. Emphasis mine.
 
From Alec Peters:

March 8, 2017

Dear friends, fans and donors:

We've been hard at work this past month, putting together a plan for Axanar Production's future following the resolution of our lawsuit with CBS Studios and Paramount Pictures.

There is still a lot of work to do, but our team agrees that now is the time to start sharing our new vision for the future with you.

Over the past month, the Axanar team has gotten together and built out a plan for what the future holds for Axanar, the film that we have spent over 3 years working on, Axanar Productions, the production company that we work under, and our sound stage, which we call Industry Studios.

We have also been putting together our financials, and asked a group of entertainment professionals review those financials. We are proud to be able to present the financials showing the use of donor funds and the committee's findings to you in this document.

You can download and view the entire report by clicking this link.

Our team is dedicated to bringing our project to life in the best, most enjoyable way possible, and bringing more great science fiction, fantasy and horror genre productions to life.

We have a great plan and hope you, our loyal fans, will join us on this journey.

Alec Peters
Axanar Productions

http://www.axanarproductions.com/wp-content/uploads/2017/03/Axanar-Donor-Memo-08-Mar-17.pdf
 
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That's the detailed accounting that they have been promising? Sure, nothing to hide there.
 
"To help further that mission, we’ll be launching a crowdfunding campaign on Wednesday, March 8th to raise funds to cover the hard costs of the soundstage: rent, insurance, utilities and storage (about $15-18k/month). The more we raise, the less we’ll have to rely on commercial rents to help us advance our mission." - Alec Peters.

79af6b3bc5b23131ace1d835c402fa444ebd7cfc574c6b04.jpg


So that is how they are going to get around the crowdfunding limitations. They are not going to raise money for Axanar, that would be against the guidelines. However there is nothing to say that they can't use crowdfunding just to raise funds for the studio.

Wait!

Did they not do that already?

All those poor people are going to donate to Industry Studios, foolishly thinking that the money will be used on Axanar. I presume that at a later stage they will be told that this current crowdfunding campaign was just to keep the lights on and that they still need more money to complete Axanar.
 
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Philip Guyott said:
"To help further that mission, we’ll be launching a crowdfunding campaign on Wednesday, March 8th to raise funds to cover the hard costs of the soundstage: rent, insurance, utilities and storage (about $15-18k/month). The more we raise, the less we’ll have to rely on commercial rents to help us advance our mission." - Alec Peters.

79af6b3bc5b23131ace1d835c402fa444ebd7cfc574c6b04.jpg


So that is how they are going to get around the crowdfunding limitations. They are not going to raise money for Axanar, that would be against the guidelines. However there is nothing to say that they can't use crowdfunding just to raise funds for the studio.

Wait!

Did they not do that already?

All those poor people are going to donate to Industry Studios, foolishly thinking that the money will be used on Axanar. I presume that at a later stage they will be told that this current crowdfunding campaign was just to keep the lights on and that they still need more money to complete Axanar.
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Gee, if they had rented a studio in the first place, they wouldn't need to raise more money... to rent a studio.
Idiots.
 
Trilateral Financial Review Committee would be a more convincing title for this new Axanar Division.
 
So, I don't know about the rest of you, but after reading that "report" I'm not sure I'd allow anyone connected to the Axanar project play the banker in a friendly game of Monopoly (tm).
 
And The (mis) Adventure Continues...
( Star Trek Theme Swells And Screen Goes To Black )
I'm not saying Peters should be exiled to Vulcan mind you...
We have Rura Pente after all ;-)
 
Glad to see they had so many folders for that extensive, exhaustive, 100% foolproof report!

.....now, what category does the cash-in-hand convention donations fall into?
 
Philip Guyott said:
"To help further that mission, we’ll be launching a crowdfunding campaign on Wednesday, March 8th to raise funds to cover the hard costs of the soundstage: rent, insurance, utilities and storage (about $15-18k/month). The more we raise, the less we’ll have to rely on commercial rents to help us advance our mission." - Alec Peters.
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I don't know. He said straight out in the above quote that money received for the facility costs will offset money they would otherwise have to raise from other sources to finish, hold onto and operate the studio facility "to advance our mission".

If by that he meant "make Axanar", that sounds like a flat out 100% admission that crowdfunding is being used to fund Axanar, since in their world Axanar may be donated the facility for Axanar's use, and not have to rent it out like everyone else. Its a direct causal link between the campaign and the benefit to Axanar's production budget.

He also in another part of the statement said that the studio is for use of Axanar Productions' operation, "the studio we call.." -- and Axanar Productions is the channel for accumulating resources for Axanar the film.

To me, he linkages all seem pretty actionable in court. The only way it could mean anything else is if their "mission" is to make some other production.

Methinks this is why the title LFIM persists. He essentially just branded his 'studio' fundraiser as an 'Axanar' fundraiser, in writing, to his entire mailing list. Aside from which it looks like a screamingly obvious violation in spirit of the guidelines, destined to have yet more negative impact on other fan films.

Studios in 3.. 2.. Fan film producers in 10.. 9..
 
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jamestyler said:
Glad to see they had so many folders for that extensive, exhaustive, 100% foolproof report!

.....now, what category does the cash-in-hand convention donations fall into?
Click to expand...
^^^
I'm sure that falls into the:

"What Donation? Was that a Donation? He just handed me money, that's all..."

category.

I really will be curious to see if the Kickstarter for "the mission" actually receives much (if any) pledges. I also have to wonder IF Alec Peters continued use of Axanar Productions in combination with what "the mission" is - will eventually draw another response from CBS should he actually be able to continue run and receive public crowdfunding for "the mission" which seems to now include OTHER Star Trek fan produced multimedia efforts (like audio dramas, etc.)

I mean wow - it seems Alec Peters REALLY enjoys poking that 'Bear' to the point CBS and or Paramount will probably release "Multimedia Guidelines for Star Trek Fan Fiction" at some point.
^^^
Not that Alec Peters really gives a shit about that per se - at this point it's all about:

Alec Peters: "Hey, how many gullible Star Trek fans are still out there who will give me money to both live on AND build a for profit Studio Rental business?"

And it's really sad how willing idiots like Johnathan Lane like to assist in what looks like a blatant and willful cash scam.
 
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muCephi said:
I don't know. He said straight out in the above quote that money received for the facility costs will offset money they would otherwise have to raise from other sources to finish, hold onto and operate the studio facility "to advance our mission".

If by that he meant "make Axanar", that sounds like a flat out 100% admission that crowdfunding is being used to fund Axanar, since in their world Axanar may be donated the facility for Axanar's use, and not have to rent it out like everyone else. Its a direct causal link between the campaign and the benefit to Axanar's production budget.

He also in another part of the statement said that the studio is for use of Axanar Productions' operation, "the studio we call.." -- and Axanar Productions is the channel for accumulating resources for Axanar the film.

To me, he linkages all seem pretty actionable in court. The only way it could mean anything else is if their "mission" is to make some other production.

Methinks this is why the title LFIM persists. He essentially just branded his 'studio' fundraiser as an 'Axanar' fundraiser, in writing, to his entire mailing list. Aside from which it looks like a screamingly obvious violation in spirit of the guidelines, destined to have yet more negative impact on other fan films.

Studios in 3.. 2.. Fan film producers in 10.. 9..
Click to expand...

If the IRS got "involved" in this "mess" how many seconds would that take ? Less then Zero ?
 
Jedi_Master said:
Of all the numbers being bandied about - the one number that actually matters is: zero, as in how many full length feature films (or any film for that matter) Axanar Productions made with their $1.7 million.
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They made a glorified "Teaser Trailer" does that count ? ;-)
 
muCephi said:
Maybe the space/utilities allocated to Propworx is not treated as an income for Propworx, and is additionally written off as an expense by Axanar... since its space paid for by Axanar and not generating a profit for Axanar.
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Recall that Peters admitted in his deposition that Propworx, a legally separate company owned by Peters, has never paid rent for its use of Axanar's facility. I expect that part of the alleged cash infusion that made up for Axanar's $300,000 budget deficit was from Propworx proceeds; Peters has said as much.

Of course, he characterizes that as a donation, when it should more accurately be considered rent. In that light, the contribution is less charitable and more in Propworx' self-interest.
 
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