[DGD] Commercial question

[Stephen Schmidt]

On Wed, 29 Mar 2006, Felix A. Croes wrote:
> It is income in both cases.  What matters is whether it is income
> made through the mud.

So the difference, I gather, is that when a group of people
forms a mud and shares costs among themselves, that is not
income made through the mud. But when people from outside
that group contribute to costs, that is income made through
the mud.

Does it matter whether they were initial founders or not?
That is, consider this case:

1. Able and Baker form a mud. Server costs are $30; they agree
to each pay $15.
2. Charlie starts playing the mud. Donations from him are
illegal by the logic we've been following.
3. Able and Baker promote Charlie to mud admin - he is now
an equal partner in running the mud. In turn, Charlie agrees
to pay $10 to help cover the server costs, with Able and Baker
also paying $10 apiece.

Would that be legal? If it would, could I organize a mud as
a co-op where all players were also owners? Presuming I have
some kind of system where all players have some say in some
kind of management decisions about the mud, i.e. it really
is run as a cooperative.

> I'm beginning to wonder whether this confusion about the word
> "income" might be some subtlety of the English language that
> I as a non-native speaker am not privy to.  Are donations not
> income in the United States?

It's probably not so much a difference in language, as difference
in tax systems, which again spring from the difference between
common law and civil law. In the US, a group of people acting
together can form a partnership which can have income of its
own, which is different from the personal income of any one
member. That can be done without formally incorporating the
mud as a business entity. So I think to American eyes (and
probably British and other common law country eyes) if one
takes donations for the server costs, then that is income for
the mud, but is not income for the person who runs it. The
income of the mud is exactly balanced by the costs of the
server, so no money is left over to be personal income for
the mud operator. If  there was money left over, then that
would be personal income for the operator, and all agree that
that is not permitted. I don't know whether civil law has a
structure similar to common law partnerships, or not. If it
doesn't, that might be part of the issue.

> Generally speaking, if you
> perform a service for some person and receive a donation in return,
> you may have a hard time arguing before a court that the donation was
> not actually in payment for the service.

That may be part of the difference too - I think in US law it
may be easier to make that argument.

Usual disclaimer, I am not a lawyer, you may not rely on anything
I say in any matter before a court, whether it's a common law court
or a civil law court :)

Steve