Question

Ian Wilson Has been unemployed for some time and is very short of money. He has learned that the local blood blank Has a severe shortage of his type of blood and is willing to pay $150 for each donation. Ian gives blood once every two months during the past year, for a total of $900 received from the blood bank. Are these funds included in Ian’s gross income? Write a letter to Mr.Wilson that containsyour advice and prepare a memo for the tax file documenting your conclusions.

Research aids : Green v. Comm., 74 T.C. 1229 (1980).

Answer 1

While getting queasy in researching your question, I came across the case of Margaret Green, a 1980 Tax Court decision (74 T.C. 1229). As a rare blood type, Green donated 95 times in 1976, earning approximately $7,000. The court found it clear that the income earned was taxable without regard to the frequency of her donations. Further, the court found that due to her frequency of donations, she should be considered self-employed in the business of selling tangible property — namely blood.

Hence, the inference from the tax case is that although blood is not your normal business goods, you can still make a business out of it for tax purposes. Depending on the frequency of your donations, money received from blood banks can be considered earned income.