Kickstarter Bands: Can Uncle Sam Touch Your Money?

LA Font

Gregg Wind, a CPA at West L.A.-based Wind & Stern, agrees that it's debatable whether the money qualifies as a gift or income. "I don't know if it's clear yet. I would say that it's an evolving area."

Echo Park-based band LA Font closed a round of Kickstarter funding last year. One hundred and sixty supporters backed the project, from friends and fans to music bloggers.

"It gave everyone the chance to say: I'm into this, I've got skin in the game, I want this to succeed," member Greg Katz says. "That said, would we do this again? The answer is probably no."

They set their goal at $9,000, and pulled in $9,135, but their cut was smaller. Kickstarter and Amazon each immediately took their 5 percent, leaving the band with $8,222. After that, they had to fulfill various rewards promised to backers, including posters, vinyl records and the chance to dictate Katz's facial hair for a week (Exception: no Hitler mustache). Then there was the shipping materials and the postage.

With the money LA Font had left, they hired a name producer, Eric Palmquist, and booked some time in an East L.A. studio. A year after the campaign, they've recorded an album they are proud of. But having used up the money on studio time, they'll have to fund the few thousand dollars more it will cost to mix, master and press the album onto vinyl themselves.

That's OK, though, Katz says. After all, their Kickstarter campaign was only meant to help them on their way to making a great record -- one that might ultimately land them a deal with a label.