I asked my CPA buddy and he said those arent gifts and should be considered taxable income based on my description he said.
However, after I talked to him I realized, why the fuck is he even risking this? He can do it legally and its the same outcome:
- Receive taxable "tip" of $60 for Game X.
- Buy Game X with $60.
- Write off $60 for Game X on taxes.
This $60 write off erases the $60 tip. As someone said, write offs dont subtract from taxes owed, its not like if you owe $5000 and you write off a $60 game you now owe $5940. Instead its more like if you earned $100,060 and write off $60, you now earned $100,000 tax wise.
so why play this autistic game and risk some detractor filing an IRS whisteblower report on him? I think you need his social to do it but i wouldnt put it past some troll to call the IRS until they get someone who will take action and look into it.
Just do it the correct, legal, less risky way, dave.