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Comment by olalonde | Hacker News Reader

It's interesting to note that Kickstarter openly admits that 20000 people ordered the console. I was under the impression that all the money going into Kickstarter projects were officially donations due to legal concerns.

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My thoughts exactly. With that wording, why did Ouya need Kickstarter to do this?

I think the difference is, Ouya doesn't have to actually deliver a product.

I think part of it is the escrow model. If you preorder something directly from the creator, but not enough other people preorder it to make the project worthwhile, everybody could be in a sticky situation. With Kickstarter, you don't pay until enough other people also sign up to make the venture workable.

There's no doubt also some psychological stuff going on. Donating to Kickstarter in exchange for a finished product is probably much more appealing than directly preordering. In both cases you take risk, but in the former case you acknowledge it up front, and can feel good about helping the project even if they somehow fail. In the latter case, you'll just feel ripped off if they fail.

You really don't want to pay tax on $1M+ in gifts.

I am not very familiar with tax law, care to explain?

They would be forced to pay a gift tax if all of the pledges were donations instead of exchanges.

http://www.irs.gov/businesses/small/article/0,,id=164872,00....

Unless I'm missing something (IANAL or CPA), the donors would have to pay the gift tax, not the donee, meaning that the tax would be assessed individually on each donation amount, not on the total; and each donor has an annual exclusion of $13,000, so unless an individual donor gave more than that amount, it's a total moot point.

Which they? That same site says that it's the donors who would have to pay the tax, not the recipients:

  The donor is generally responsible for paying the gift tax.

http://www.irs.gov/businesses/small/article/0,,id=108139,00....

That said, the blog post was well after the trigger point where the donations and their associated rewards are locked.

Donations aren't locked until the time limit expires. I pulled mine today.

Did they edit the post? I don't see that anywhere.

Yes they changed it.

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