3 ms·

This is about income tax, not sales tax. It being a sale is important because if it weren't one, it would be a gift, and gifts aren't subject to income tax.

• _delirium 14y ago
  Fwiw, the test for gifts under the tax code is payments motivated by "detached and disinterested generosity". So if you get something in return, it's hard for it to count as a gift. It doesn't have to even be a sale per se; for example, tipping at a restaurant is technically a voluntary payment for which you receive nothing in return, but it's not considered sufficiently detached/disinterested to count as a gift.
  • rprasad 14y ago
    Tips are explicitly taxed as income to the recipient. They are not regarded as gifts by any taxing authority in the U.S.
    • _delirium 14y ago
      That's what I was arguing, that you can't classify something as a gift just because technically there is no exchange of consideration. Even though tips formally have no consideration, they still fail the detached/disinterested test, and count as income.
• eli 14y ago
  Increasingly offtopic now, but gifts are most certainly subject to taxation. You just get an exemption for the first $10k or so.
  • eurleif 14y ago
    Right, but the gift tax is paid by the giver, not the receiver, and the exemption is per-giver, not per-receiver.