Research Interview 1 - IRS Attorneys

I decided to make a list of IRS Attorney Law Firms in San Diego and ask them some questions regarding cash gifting.  I called several law firms and was immediately shot down after asking for an interview.  After like the third place that I called I finally got a Lawyer to agree to answer some questions. 
This is the result of my interview with Law Offices of Ronson J. Shamoun on May 23, 2012 - I will keep the person I spoke with anonymous for his own privacy.

What are the tax ramifications involved with cash donations/cash gifting in California?

I'm not sure what the amount is right now, because it changes every year,but I think it's around $15,000 right now.  Any one person can give a cash gift of up to $15,000 to another person in one year without being taxed.   Let's say that your mom wants to give you $15,000 dollars because you lost your job and she wants to help. Well she can do that without being taxed and you can receive that charity without any tax liabilities. Also if your dad wants to give another $15,000 he can, because each individual no matter if they are married can give up to $15,000 in a calendar year.

What about the person receiving the cash gift, are they liable for taxation?

No, the person who receives the donation will not be taxed at all. You can receive $15,000 from your mom and $15,000 from your dad and so long as it was given with a donative intent you can receive as much money people are willing to give you without paying taxes.

I'm interested in investing in a home based business called the Cash Tracking System that requires you to pledge a certain amount of money as a donation or charity to join this group and be eligible to receive money in return.  Now there is no product or service involved in this transaction, is that legal?

Well by law I am not allowed to give you legal advice, and I dont know enough about the this platform to say if it's legal or not but if you are giving an amount to a business or to an organization with the intent or hope to receive money in return then that is not a donation.  If you give money to a charity or church with a pure heart and don't expect to receive anything in return then that is a donation, and only if you give with a donative intent.

So, what If I was to invite people to visit my website and introduce them to the Cash Tracking System, that's the cash gifting program, and show them how they can be part of this private group of charittable individuals?

So what you are saying is that you are soliciting people to visit your website and give money with the hope of making money themselves.

Well, yes.

That sounds an awful lot like a business to me.  Any time that you solicit your self in any form of advertisement and attract people to join your group or organization, that's is an organized business.

What if I was to be auditted by the IRS and asked to give an account for the income that I am receiving for the program?

It would be very difficult to provide proof that the money you received was in fact donated to you and not part of an organized system.

What if I had a letter from every person who gave me money that stated that they were giving me a cash gift without expecting a product or service?

That might or mighr not hold up in court, but it definitely can help your case.  I can't tell you if the system is legal or not, but I can tell you that in any transaction, even if you're selling drugs, you need to pay your taxes to Uncle Sam.  Now that doesn't mean that you are exempt from any legal action if the activity is illegal, but you will need to pay your taxes if you are generating income from any business.


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I have to say that was a very interesting phone conversation with the RJS attorney.  I intend to interview several other law firms and ask different questions to get some solid facts about this whole Cash Gifting  program. 

I hope that this information answered some of your questions and I hope to provide you with more in the near future.

Please feel free to contact me with questions you would like for me to ask on my interviews.