# What are the tax ramifications of crowd sourced funding for art projects?

**URL:** <https://boards.straightdope.com/t/what-are-the-tax-ramifications-of-crowd-sourced-funding-for-art-projects/625816>\
**Category:** Factual Questions\
**Created:** [June 21, 2012, 3:52am UTC](https://boards.straightdope.com/t/what-are-the-tax-ramifications-of-crowd-sourced-funding-for-art-projects/625816 "2012-06-21T03:52:33Z")\
**Posts on this page:** 1\
**Page:** 1

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**Author:** ![Darryl\_Lict](https://avatars.discourse-cdn.com/v4/letter/d/7cd45c/32.png) [@Darryl\_Lict](https://boards.straightdope.com/u/Darryl_Lict)\
**Post date:** [June 21, 2012, 3:52am UTC](https://boards.straightdope.com/t/what-are-the-tax-ramifications-of-crowd-sourced-funding-for-art-projects/625816/1 "2012-06-21T03:52:33Z")

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I’m thinking about trying to fund an art project via [Kickstarter.com](http://Kickstarter.com). For the record, I live in California.

1. Are the funds received just considered ordinary income? In other words, I have to pay taxes on the funds, correct?

2. Can I deduct my parts and supplies costs because I’m an artist? I am selling “levels”; in this case I’m giving a t-shirt away at the lowest funding level, (also the parts cost for the actual art project).

I’m purchasing tools which I am using for this project.

1. Can I deduct the cost of these tools?

2. Assuming I can deduct the cost of these tools, at what dollar amount do the tools become “capital equipment”?

3. How many years do you depreciate the capital equipment?