Post: company makes payment to individual, must it pay taxes?

Posted by Will J on 3/28/08

Situation: there is an online social network that raises
money from online ads, like the Google AdSense ones. It pays
its best users 50% of the revenue that comes from those ads;
this is a commitment stated in the T&C, not just a random
gift or prize.

- Will the company have to pay taxes for this payment? Can
it deduct them? What are the thresholds?

- And as for the individual, must he/she pay taxes for this
income? If he/she decides to use it for charity purposes,
can he/she deduct them?

This example applies for a US-based, legitimate and audited
company.

Posts on this thread, including this one

company makes payment to individual, must it pay taxes?, 3/28/08, by Will J.